Black Box Car Insurance

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What’s a black box?

What is black box car insurance?

What sort of data does a black box collect?

What does an insurer do with black box data?

Who can benefit from black box car insurance?

Is my black box data safe?

What are the pros and cons of black box car insurance?

Is black box car insurance cheaper?

What does black box car insurance cover?

What are some other ways to save on car insurance?

Widen your search for car insurance

Long story short

Black box car insurance isn’t a really thing in Australia

It’s popular in Europe and North America, but hasn’t caught on widely here yet.

Your black box tracks speed, braking, drive times, and other vehicle-related data

It’s now a feature of all new cars.

Black box car insurance allows insurers to match premiums to how people drive

Safe drivers, whatever their age and gender, could save more on car insurance costs.

What’s a black box?

Did you know that your car might have a black box? Yup, just like a plane’s black box, it records data on how you drive. It’s also sometimes known as a telematics device or event data recorder. As of July 2024, all new cars have to have one. This is meant to improve road safety and accident investigations.

In an everyday context, a black box allows cars to: 

• specify the time you’ll reach your destination
• suggest a more fuel-efficient route
• determine how far you can travel before you run out of fuel. 

In terms of car insurance, a black box records data such as how many kilometres someone drives, their speed and acceleration, and how smoothly they brake or corner – all of which insurers use to interpret how safe a driver they are. 

What is black box car insurance?

Although it’s popular in Europe and North America, black box car insurance is quite rare in Australia. Here’s how it works: 

1. Someone’s black box sends the data to their insurer in real time.
2. Then, their insurer uses the data to assess how likely they are to make a claim and calculates their premiums accordingly – instead of just relying on generalised factors that determine anyone’s risk profile. 

Consider our fictional friend Toby, a male driver in his early 20s. On any given day, most insurers would see someone like Toby as a higher-risk driver because of his age and gender. 

In fact, iSelect data has male drivers aged 18–24 paying $1,940 for their comprehensive car insurance in 2024. That’s nearly $900 more than female drivers older than 45.¹Based on iSelect car insurance sales, 2024

In reality, though, Toby defies stereotypes and is a more level-headed driver than his 40-something fast and furious aunt, who, going just by age and gender, would be less of a risk to insure. 

Toby decides to go with a black box car insurance policy. Over time his driving behaviour is recorded and sent to his insurer through a telematics device. 

Studying Toby’s driving data, his insurer sees him as the safer driver than the typical 20-year-old male and decides to lower his premium. Way to go, Tobes! 

The takeaway? Black box car insurance is a quicker way for someone to prove to an insurer that they’re a safe driver than, say, waiting years to build a no-claim history. It means they pay a premium that matches how they actually drive, not how an insurer assumes they drive. 

What sort of data does a black box collect?

For insurance purposes, the data recorded by a black box can be used to measure your risk level as a driver.

Here’s the type of data your black box gathers, and why it can help insurers. 

• Speed: Keeping within speed limits demonstrates your ability to follow road rules and safety.
• Throttle position: Avoiding sudden bursts of speed helps keep your car at a steady pace with surrounding traffic.
• Steering: Taking smooth turns at appropriate speeds helps keep your car stable and safe.
• Braking: Stopping or slowing down your car at a measured pace helps give other drivers enough time to react.
• Vehicle condition: Keeping your car in a good condition, such as ensuring your brakes work, contributes to safe driving.
• Drive times: Driving during the day and during off-peak hours may be seen as less risky.
• Type of road: Avoiding hazardous roads or accident-prone areas can show your ability to make safe driving decisions. 

What does an insurer do with black box data?

Calculate insurance premiums

Insurers use black box data to assign a more accurate risk profile to a driver – like a driver score. The more safely someone drives, the less risk they represent to their insurer. This typically leads to lower premiums. 

Investigate car crashes

Black box data could help determine who the at-fault driver was in a multi-car collision, or whether a single-car bingle was caused by the driver or a mechanical fault.  

Tell someone how they’re driving

An insurer might even use black box data to give someone feedback on their driving – whether it’s a tip to improve their braking or a pat on the back to say, ‘Keep up the good work!’ 

Who can benefit from black box car insurance?

In theory, anyone who’s a safe driver can benefit from black box car insurance, because you’re rewarded with lower premiums for posing less of a risk to your insurer. 

Black box insurance might especially suit people who are in a high-risk category, such as inexperienced drivers, P-platers, or drivers younger than 25. These groups typically pay more for car insurance – but what if you don’t fit the stereotype? Your black box can prove it.  

And because how much you drive factors into premiums, someone who doesn’t use their car frequently could also benefit from black box car insurance. 

Is my black box data safe?

Any data collected by a black box is owned by the vehicle owner and stays anonymous unless it’s needed for legal purposes. For example, if you get in a crash and it’s not clear who’s at fault, a court could access data related to things like your seatbelt usage or airbag deployment.  

Of course, if you have black box car insurance, you’ll share your black box data with your insurer, but that choice is up to you.  

As with any data collection, there’s a risk of hacking and privacy breaches. Life in the modern world, am I right? 

What are the pros and cons of black box car insurance?

Helpful tip

Black box car insurance may not have picked up speed in Australia just yet. But there are other car insurance options that come close, with similar benefits. For instance, some comprehensive policies come with pay as you drive cover, which offers lower premiums if you drive within a certain number of kilometres a year – especially useful if you don’t drive too often. 

Adrian Bennett

General Manager for General Insurance

Is black box car insurance cheaper?

If you’re a safe driver, black box car insurance could end up being cheaper.  

That said, your black box car insurance premium may still hinge on factors such as the type of car you drive, where your car is garaged, your extras, and which insurer you choose to go with. That’s why, when it comes to saving on car insurance, it helps to compare policies at least once a year. 

What does black box car insurance cover?

The coverage you might get with a telematics-based car insurance policy depends on the level of car insurance you purchase – whether that’s third-party or comprehensive. Some insurers may only offer their version of black box car insurance with a comprehensive policy – meaning it could come with common comprehensive features, including: 

cover for loss or damage cover to your own car 

lifetime guarantees on authorised repairs 

transport costs (hire car)  

cover for electric vehicle batteries and charging equipment 

emergency travel and accommodation 

replacement car after a total loss. 

What are some other ways to save on car insurance?

Given that black box car insurance is probably not an option, it might help to stick with the basics when it comes to saving on car insurance: 

• Use a comparison tool to shop around for policies to help ensure you’re getting a good deal.
• Increase your excess – a higher excess typically reduces your premium because you take on more risk.
• Paying your premium annually instead of monthly or fortnightly could save you big time.
• Limit the age and number of drivers listed on your policy as much as you can.
• Insure your vehicle for its market value; agreed value cover usually increases your premium.
• Keep your car secure with anti-theft features and, if possible, in a lockup garage or under cover.
• Trim the optional extras if you don’t need them.
• Downsize your vehicle if you can or choose a low-risk car to drive.
• Claim only when your repairs cost significantly more than your excess – it helps with your claim history. 

Widen your search for car insurance

Black box car insurance isn’t currently on iSelect’s radar. But if you’re scanning the market for car insurance that offers better value, you can start with iSelect’s comparison tool to scope out policies from our range of providers.