For many young people, finding affordable car insurance can be a challenge. Being an inexperienced driver, insurers may consider you a risk. As a result, premiums for young motorists may be up to four times more expensive than those for experienced drivers. To resolve these issues, some insurance providers are now offering black box insurance plans.

Black box insurance plans make use of complex technology to track how well you perform behind the wheel. This way, you are charged according to how well you actually drive. A ‘black box’ – a small, GPS-tracking device that is fitted inside your car – tracks various parameters, including how often and how far you drive, speed limits adherence, acceleration and braking smoothness, and how efficiently you drive around corners. This information is then relayed to your insurer, enabling them to tailor your premiums based on your performance.

There are various options available under black box insurance policies. Some providers may offer you a base premium that can be increased or decreased depending on your driving performance each month. The insurer will allow you to track your driving progress using their mobile app or website so that you are aware of what you need to improve. You may be rewarded with a certain number of points at the end of each month, which translate to your rates increasing or decreasing.

Other black box insurance plans work differently – their main aim is to limit the amount of time you spend on the road. According to studies, the more you drive, the higher the chances of accidents. Under this type of policy, your insurer may limit the number of miles you are allowed to drive each year, and use the black box to check you don’t go over your allotted amount. Typically, the limits for these plans are 6,000, 8,000, or 10,000 miles per year. However, you may be allowed to bump up to the next tier if you are about to go over. In exchange for safe driving practices, young motorists are rewarded with bonus miles for free.

Another option is that some insurers may only use the black box device during the first year of you being their customer. This way, they get a comprehensive understanding of your driving habits before taking decisions regarding your renewals. In this instance, as a safe driver, you may witness a significant drop in your premiums – up to 50% over the first few years – while poor drivers may see their rates rise further.