Privacy fears stopping millions of drivers from getting cheaper car insurance

Fears about their privacy are putting millions of British drivers off taking out so-called 'black box' car insurance, resulting in millions of pounds in additional premiums every year.

A new survey has revealed that drivers are reluctant to take out telematics based insurance because they are concerned about surveillance, although many would consider such a policy of the savings were significant enough.

The research also found that many people still unaware of the cost savings of 'black box' car insurance. Keep reading to find out more.

Drivers concerned about 'Big Brother' surveillance 

Research from a leading price comparison website has revealed that millions of drivers are shunning black box car insurance deals for fear of being tracked by their insurer.

Just one in 33 drivers (3 per cent) have telematics based insurance, meaning that they consent to having their driving monitored via a black box in their car. Insurers can monitor data such as the speed of driving and the times of day a motorist is travelling in order to give them a more accurate price for their car insurance cover. It aims to cut the cost of protection as it is based on actual driving habits rather than general statistics.

The study found that one in four drivers would rule out taking such a policy because of privacy fears. Of these, nearly two thirds said they were concerned about 'Big Brother' style surveillance while 37 per cent do not want their driving monitored by their insurer. The research also found that almost half of drivers did not want their information to be sold to other companies.

Drivers would consider black box insurance if it saved them around £100 a year

While millions of drivers are nervous about telematics insurance, the majority would be prepared to consider this type of cover if it were to save them a significant amount of money. The research found that £98 was the average 'tipping point' for most drivers, although younger motorists would want to save £173 before switching to telematics cover.

The report also found that a quarter of drivers simply don’t know what telematics is. It said: "Car insurance technology is baffling British drivers with just 3 per cent having taken out a telematics policy. And, despite telematics being introduced over ten years ago, a quarter of British drivers have never even heard of the technology."

The report notes, however: "To make telematics worth their while though, consumers would want to see savings of at least £98 a year on their insurance premium.

"However, this amount differs hugely with age – with those aged 18 to 34 and often on much higher basic premiums saying they would need to save £173 to consider taking out a policy, while those over 65 would be happy with just £72 of savings."

The study also revealed that drivers had a poor understanding of how telematics data was used. Over half of drivers believed that black box data was shared between insurers while more than a third thought they could use their own data when applying for car insurance.

Insurance expert Rod Jones said: "Despite telematics being nearly ten years old, drivers are still in the dark about black box insurance – confused about the technology and the full benefits it can offer.

"Concerns around personal data are a major barrier to telematics adoption – in particular, how the data will be used and by whom. It’s vital that the Government and the insurance industry addresses these concerns if this technology is going to take off.’

He added: ‘Until this happens, telematics insurance policies are likely to remain a low priority for drivers. Millions of drivers may be missing out on hundreds of pounds of savings each year, especially young drivers who are faced with high car insurance premiums.’