Black box insurance, also known as Telematics Insurance, is an insurance program that offers premiums based on driving behavior instead of historical performance. Insurance companies use telematics technology to create black box by fusing data from telecommunications and informatics applied in wireless devices like cell phones and GPS. Financial industry always try to create new ways for its customers to access financial products at minimal cost possible and the rise of technology give the opportunity. Insurance sectors also implemented technology in their process not only to improve their services for the customers but also giving reassurance for themselves. The technology typically have function to monitor driving behavior.

Most black box are physically installed in the car, but it can be installed on the smartphone as an app. The installed black box will measures speed, location, distance traveled, driving frequency, and time of day the car is on the road. Furthermore, insurance company will measures how hard brakes are applied, how sharp a corner is taken, and acceleration level. These activities will provides information about the customers' driving performance. The insurance company will use the information to personalized the premiums. The higher the score a driver get, the lower premium rate they will get. 

Some insurance company use black box installment to create "Pay As You Drive" insurance or PAYD. The car drivers only pay for their driving mileage as recorded by the black box device or app. While in standard insurance customers get charged a fixed premium given the number of miles allowed per year. Insurance companies give various reward for their customers who consistently performing safe driving. Some insurers offer refund to drivers, some offer bonus mileage allowance or giving lower rate for renewal. 

Since insurance companies constantly collect data from the black box, data privacy issues become a concern. Invasion of privacy may happen when personal data is shared with third parties like bank or law enforcement agencies. Therefore, laws of data privacy protect customers and creating usage law on how data is used, shared, and stored.

Remember, drivers who makes long commutes frequently, works late night shifts, or often drive over the speed limit  will end up paying more premium  if they choose black box insurance than a standard auto insurance.