A black box policy is motor insurance that uses a fitted device or app to record how, when and where a car is driven. Premiums are then adjusted to reflect the driver's actual behaviour rather than statistical averages alone.
In one line: A black box policy prices motor cover from recorded real driving data rather than estimates.
How a black box policy works
A small telematics unit is fitted to the vehicle, or a smartphone app is used, capturing speed, braking, cornering, mileage and time of day. Insurers feed this into the premium so careful driving can lower the cost.
A new driver quoted 2,400 GBP on a standard policy might pay 1,600 GBP on a black box policy after several months of safe scores, while harsh braking and late-night driving could push the price the other way.
These policies are marketed mainly at younger and newer drivers, where average claims data would otherwise make standard cover very expensive.
Black box policy vs telematics
Telematics is the underlying technology that collects driving data. A black box policy is the insurance product built on top of it, where that data directly shapes the premium and any curfews or mileage limits.
Not every telematics policy uses a physical box, because app-based monitoring achieves the same measurement using the phone's sensors.
Primary source: FCA: Insurance