What is Telematics?

Our Guide to Telematics Insurance

Telematics is often called “black box insurance”, but these days it’s just as likely to be a small sensor and an app on your phone. That can feel confusing if you’re new to the road or just trying to keep your costs down.

In this guide, we explain in plain English what telematics is, how the tech works, what a telematics device tracks and some of the possible pros and cons. We’ll also look at which types of drivers often choose telematics.

At 1st Central, the aim of telematics isn’t to catch people out – it’s to understand how you actually drive, so pricing can be fairer for safer drivers. That fits with our focus on clear, simple car insurance for UK drivers.

What is telematics in car insurance?

Telematics is car insurance that uses a device or smartphone app to measure how you drive and share that data with your insurer. Instead of only looking at things like your age, postcode and car, telematics takes your real driving into account.

Industry guidance from the Association of British Insurers (ABI) explains that these “pay how you drive” policies use GPS and other sensors to look at how, when and where the vehicle is used, and then mix this with the usual risk factors to help set the price. ‘Safe’ drivers may get lower premiums than ‘less safe’ drivers based on this information.

You might hear telematics called:

●    Black box car insurance

●    Pay-how-you-drive insurance

●    Usage-based insurance (UBI)

●    Telematics car insurance or telematics policy

Some policies still use a fitted black box, but with 1st Central Connect telematics car insurance, it’s a small sensor you attach to your windscreen and link to an app, rather than a full “black box” install.

How does telematics car insurance work?

At a simple level, telematics insurance follows a clear pattern:

1. You buy a telematics policy.

This might be aimed at young or new drivers, or anyone who wants their driving habits to be reflected in their price.

2. You install the device or app.

With some insurers this is a black box fitted in your car. Others, including 1st Central, use a sensor and smartphone app that you set up yourself at home.

3. Your journeys are recorded.

The system records trips in the background – usually things like speed, how hard you brake, the time of day you drive and roughly where you travel.

4. Your driving is scored.

The telematics system turns your trips into an overall driving score or set of scores (for example, braking, speed, phone use).

5. Your insurer uses the data.

Insurers can then use this information in different ways, such as helping to work out your renewal premium or spotting very risky driving that may need to be reviewed.

Telematics doesn’t replace all the usual rating factors, but ABI guidance is clear that driving data sits alongside things like age and address when premiums are set.

How telematics links to road safety

Recent data from the Department for Transport shows that young male car drivers aged 17 to 24 are still about four times as likely to be killed or seriously injured (KSI) as drivers aged 25 and over, even though KSI casualties in crashes involving at least one younger car driver have fallen by 61% since 2004. This is one reason telematics is often discussed for young drivers in particular.

What does a telematics device or app actually track?

Telematics devices and apps are built to understand how the car is being driven, not every detail of your life. Different insurers may track slightly different things, but ABI guidance highlights a few core data points.

Common data points include:

●    Speed – how fast you drive compared with the speed limit.

●    Braking – whether you brake smoothly or often need to brake hard.

●    Acceleration and cornering – how sharply you pull away or turn.

●    Time of day – when you usually drive (for example, late at night or during rush hour).

●    Mileage – how many miles you drive over a period.

●    Road types – whether you mainly use motorways, rural roads or busy town streets.

Some telematics systems may also pick up:

●    Phone use while driving (for example, handling the phone while a trip is detected).

●    Crash alerts if the sensor detects a sudden impact.

1st Central Connect, for example, uses a windscreen sensor and an app to log your trips, give you a driving score and provide feedback on your journeys, with features such as crash detection and optional eco-driving tips.

How insurers use this data

Insurers may:

●    Build a driving score that feeds into pricing at renewal.

●    Give feedback to help you spot risky habits, such as speeding.

●    Look for very high-risk behaviour that could breach policy terms.

A large consumer study reported by Which? found that telematics policies were the cheapest option 42% of the time across thousands of quotes, with the biggest savings for 17- to 19-year-olds, where the cheapest telematics policy was on average more than £2,000 cheaper than the cheapest non-telematics policy.

What is telematics insurance and what are the pros and cons?

Telematics insurance is simply car insurance that uses this driving data as part of how your premium is set. The core cover (for example, comprehensive or third party, fire and theft) will still be explained in your policy documents – telematics mainly changes how your risk is judged.

At 1st Central, our telematics policy is called 1st Central Connect. It uses a sensor and app rather than a hard-wired black box, and is designed to reward safer driving more fairly over time. 

Telematics insurance: possible benefits and drawbacks

Below is a simple view of some common pros and cons. Exact features and outcomes can vary by insurer and by driver.

A large privacy study summarised by Insurance Edge found that 62% of UK motorists were worried about sharing their personal location data and only 19% had ever used a telematics insurance product, even though many were open to the idea in principle.

Who might telematics policies suit – and who might they not?

Telematics isn’t right for everyone, and different insurers design their policies in different ways.

Drivers who often choose telematics

Telematics policies can appeal to a range of drivers, including:

●    Younger and inexperienced drivers

While telematics is often associated with younger drivers, it can also suit people who are new to driving at any age. Many people are learning to drive later in life, and limited on-road experience can still affect how insurers assess risk. Monitoring driving behaviour may help some inexperienced drivers demonstrate safer habits over time.

DfT figures show that in 2024, KSI casualties in crashes involving at least one younger car driver still accounted for around 20% of all car-driver KSI casualties, despite significant reductions since 2004.

●    Parents of new drivers

Some parents are interested in telematics for the additional reassurance it can provide while their child is driving independently for the first time. Depending on the policy, features such as driving feedback or alerts may help parents feel more confident as a young or newly qualified driver gains experience.

●    Drivers who feel they are safer than average

If you usually keep to the speed limit, avoid harsh braking, and limit driving at night, you may feel comfortable with your driving being measured. Telematics can appeal to drivers who believe their everyday driving is lower risk than average.

●    People who like feedback and technology

Some drivers value trip scores, driving insights, and in-app feedback. For these drivers, telematics can feel more engaging than a traditional policy and may help them reflect on their driving habits.

●    Drivers interested in additional claims support

Telematics data can sometimes help insurers understand what happened in a collision, in a similar way to dashcam footage. For some drivers, this potential added context during a claim is an appealing feature, although how data is used varies by insurer and policy.

If you fall into one of these groups, you can compare a telematics quote with a standard car insurance quote using tools like our young driver car insurance options. 

Drivers who may not choose telematics

On the other hand, telematics may not suit people who:

●    Don’t want their journeys tracked.

 Some drivers are simply not comfortable with any extra data being collected about where and when they drive.

●    Drive at higher-risk times or patterns.

 If you regularly drive late at night, at high speeds or cover very high mileage, you may not see the same potential benefits.

1st Central’s view on telematics and fair pricing

From 1st Central’s point of view, telematics is most useful when it makes pricing feel fairer and clearer, not more complicated. Our telematics products are designed so that real driving – things like smooth braking and sensible speeds – can work in your favour over time, instead of rating you on age alone.

We also believe telematics should be:

●  Transparent. It should be clear what’s being measured, how it’s used and what that could mean for your policy. ABI’s good practice guide for telematics stresses the importance of simple, honest information and fair treatment.

●  Practical. With 1st Central Connect, you can install the sensor yourself using our step-by-step installation guide, instead of booking an engineer to fit a large box into your car.

●  Supportive. The aim is to help you understand your driving better and make it easier to build up a good record, not to punish drivers for one-off mistakes, unless they are exceedingly dangerous, like speeding over 100mph.

If you want to see how telematics sits alongside our other products, you can compare 1st Central car insurance products and see where Connect fits within the wider range. 

Key things to remember about telematics

• Telematics insurance uses a device or app to measure how you drive and adds this to the usual factors used to set premiums.
• Typical data points include speed, braking, time of day, mileage and road types, plus sometimes phone use.
• Some studies suggest telematics can help reduce accidents and support safer driving, but independent long-term evidence is still limited.
• Telematics may be attractive to young or careful drivers who feel their current premiums don’t fully reflect how they drive.
• It may not suit drivers who dislike being monitored or who regularly drive in higher-risk ways or at higher-risk times.

Conclusion and next steps

Telematics is simply a way of using real-world driving data to help set car insurance premiums more fairly. It can give safer drivers a chance to show how they drive, offer feedback to help improve habits and may support wider road safety – but it also raises important questions about privacy, fairness and who chooses to opt in.

If you’re curious, one practical next step is to get a standard quote and a telematics quote side by side, and then read the policy and privacy information for each before you decide what to explore further. 

FAQs

Q1: What is telematics insurance?

A: Telematics insurance is car insurance that uses a device or smartphone app to track how you drive – such as speed, braking and time of day – and combines this with the usual factors like age and postcode when setting your premium.

Q2: What is a telematics device?

A: A telematics device is the hardware that records driving data. It could be a fitted “black box”, a plug-in device, a tag on your windscreen or just your smartphone running the insurer’s app, depending on the policy.

Q3: How can telematics affect my premium?

A: If your driving is generally safe – for example, obeying speed limits, avoiding harsh braking and not driving late at night too often – a telematics policy may lead to a lower premium over time. If your driving is consistently high-risk, your premium could stay the same or increase, depending on the insurer’s rules.

Q4: Will a telematics policy track everywhere I go?

A: Telematics usually needs to know where and when you drive so it can measure things like speed and road type, but insurers should explain clearly what they collect, how long they keep it and who they share it with. Many drivers’ main concern is location tracking, so it’s important to read the privacy information before you buy.

Q5: Is telematics only for young drivers?

A: No. Young drivers are a common focus because their risk is higher, but driving style based insurance can also be used by more experienced drivers who want their good driving to be recognised, or by fleets that