Can Insurance Company See Which Car You Own or Finance
The team at NimbleFins has gathered data across dozens of car insurance quotes to establish whether or not telematics is really cheaper, and if so, by how much.
We found that the cheapest policies on offer for our sample driver were telematics. In fact, 4 of the 5 cheapest offer in our study were telematics. But the most expensive car insurance offer was also telematics—and it cost over £11,000 per year! So "telematics" is no guarantee of cheap car insurance.
Here's a scatter plot of the telematics (purple) and regular car insurance (teal) offers for our sample driver so you can see how the quotes compare on excess and premium.
Let's have a look at how the prices broke down across the 53 car insurance offers in our study.
The cheapest plans are telematics
The absolute cheapest car insurance offer in our study was a telematics policy, at a cost of £588 for our sample driver. This is 13% cheaper than the cheapest regular car insurance policy on offer, which cost £678.
| What's the cheapest: telematics or regular car insurance? | |
|---|---|
| Cheapest regular policy | £678 |
| Cheapest telematics policy | £588 |
| Telematics savings | £90 |
| Telematics discount | 13.2% |
One policy can be an anomaly, however. So let's expand the analysis and consider the 5 cheapest telematics vs the 5 cheapest regular policies. How do the prices compare now that we include more data? Telematics still comes out cheaper, again by 13%.
| Comparing costs of the 5 cheapest telematics vs 5 cheapest regular car insurance offers | |
|---|---|
| Average of 5 cheapest regular policies | £780 |
| Average of 5 cheapest telematics policies | £678 |
| Telematics savings | £102 |
| Telematics discount | 13.1% |
On average, telematics has a lower excess, too
Another benefit of choosing a telematics policy could be getting coverage with a lower excess, but this is not always the case. We took a look at the excesses for the 5 cheapest telematics and 5 cheapest regular car insurance offers, and found that the average telematics excess was £459, which was 23.5% less than the average excess of £600 on the regular plans.
However, the regular car insurance figure was skewed up by one very high excess (£1,300)—if we had removed this data point, then the regular policies would have had a lower excess.
As you can see in the first chart in this study, some telematics plans do come with a higher excess that can make the cheaper premium less appealing.
| Lower excess on telematics policies | |
|---|---|
| Average excess on 5 cheapest regular policies | £600 |
| Average excess on 5 cheapest telematics policies | £459 |
Cancellation fees are usually higher on telematics plans
There is a hidden cost to telematics car insurance, however—the cancellation fees can be significantly higher than on regular car insurance. For example, NimbleFins research has shown that the cost to cancel telematics car insurance can be as high as £247 during the cooling off period and £155 afterwards—these fees are 2-4X higher than the cost to cancel a regular car insurance policy.
Why are cancellation fees so high on telematics plans? Because the company needs to recoup some of the costs associated with setting up a telematics plan, like sending out the black box and having an installer fit the box to the policyholders car.
Sometimes telematics is more expensive
While telematics was the cheapest, there's no guarantee that choosing a telematics policy will save you money. In fact, of the 53 offers in our study, the most expensive policy was telematics—and it cost a whopping £11,327!
| Telematics can be more expensive than regular car insurance | |
|---|---|
| Most expensive regular | £4,073 |
| Most expensive telematics | £11,327 |
Telematics is cheaper than regular car insurance from a single brand
If you look at telematics vs regular car insurance for a given brand, the telematics policy should theoretically be cheaper. And that is, in fact, what we found. Of the four brands offering both telematics and non-telematics options, the telematics was cheaper on average by 31% compared to the regular car insurance option (with a range of 3% to 68%). In terms of £ savings, telematics was cheaper on average by £560 (with a range of £34 to £1,573).
| Brand | Telematics plan name | Telematics cost | Regular plan name | Regular cost | Telematics £ savings | Telematics % discount |
|---|---|---|---|---|---|---|
| Admiral | Admiral Insurance | £664 | Admiral | £759 | £95 | 13% |
| Hastings | Hastings Direct YouDrive | £746 | Hastings Essential | £1,285 | £539 | 42% |
| More Th>n | More Th>n Low Miler | £1,057 | More Th>n Essentials | £1,091 | £34 | 3% |
| RAC | RAC Black Box | £749 | RAC | £2,322 | £1,573 | 68% |
| Average telematics savings | £560 | |||||
| Average telematics discount | 31% | |||||
Methodology
We gathered 53 car insurance quotes from a major UK comparison site. Of these, 11 were telematics and 42 were regular car insurance policies.
Our sample driver was 25 years old, has been driving for 6 years and has a clean driving record. He drives a 5-year-old Ford Fiesta ST Line Econoboost 100 valued at £7,000 and he drives 7,000 miles each year.
Learn more about the cost of car insurance and how premiums can vary here.
Regarding the last section on comparing telematics to non-telematics per brand, note that More Th>n and Hastings offer multiple non-telematics car insurance plans. For that section, we compared the telematics plan to the cheapest of the regular, non-telematics plans on offer for each brand. The telematics discount would therefore be even greater when compared to these brands' more expensive offerings.
Erin Yurday is the CEO, Co-founder and Editor of NimbleFins. Prior to NimbleFins, she worked as an investment professional and as the finance expert in Stanford University's Graduate School of Business case writing team. Read more on LinkedIn.
Can Insurance Company See Which Car You Own or Finance
Source: https://www.nimblefins.co.uk/cheap-car-insurance/is-telematics-cheaper