Telematics insurance policies which track driver behaviour could save younger drivers an average of £848 a year but the savings they offer are falling, according to new analysis.
Comparisons of car insurance policies have revealed the huge difference between traditional and telematics policies for young drivers, with the youngest enjoying savings of more than £1,000 in some cases.
According to the analysis by ComparetheMarket, telematics or black box policies are the cheapest route for two thirds of those aged 17 to 20, who see average savings of £1,307 over normal policies.
The savings are less for those in the 21-24 age group but 42 per cent can still save money, with average premium reductions of £388.
Barclaycard customers urged to check letters for possible fee refunds of up to £760
Five engagement rings that are trending now
Aldi delivers trend-led luxe for kids
The 10 best places to get fish and chips in Worksop this National Fish and Chip Day - according to our readers
2022 SsangYong Korando e-Motion review: electric SUV with a budget-friendly price, specification and range
However, the research shows that the proportion of young motorists who can save money via telematics insurance has fallen year-on-year. At the end of 2019, telematics premiums were cheaper than regular premiums for 74 per cent of quotes for 17-20 year olds and 48 per cent of 21-24 year olds. However, in the same period in 2020, 67 per cent of telematics premiums quotes were cheaper for 17-20 year olds, and 42 per cent of 21-24 year olds.
Telematics policy prices have also not kept pace with recent reductions in average premiums. According to ComparetheMarket’s data, based on enquiries via its site, the average cost of a telematics premium has declined four per cent, while overall average premiums have dropped eight per cent to £727.
Telematics insurance uses an in-car tracker to monitor driver behaviour. It allows insurers to tailor prices more closely to individual drivers and is seen as a way of encouraging safer driving among young motorists, who are more likely to be involved in a crash than older drivers.
The data also shows that the value of the policies drops off significantly for older drivers with a non-telematics policy cheaper for 75 per cent of 25-29-year-olds and a massive 98 per cent of over-65s.
Dan Hutson, head of motor at ComparetheMarket.com said: “While the average cost of car insurance has fallen as a result of the pandemic, our research shows the cost of telematics premiums has declined at a much slower pace.
“This means that these policies are less likely to be the cheaper option for drivers compared to previous years. However, this shouldn’t deter younger drivers from considering these policies. Telematics premiums are usually aimed at young people and students which is why the policies can be cheaper for what is considered a higher risk age group. [They] can also provide the same benefits to other motorists who might be classed as high risk, including elderly drivers or drivers with convictions.”
Percentage of enquiries where telematics is cheaper (2020)
|Age||Non-telematics cheaper||Telematics cheaper|