Telematics automobile insurance coverage insurance policies cancelled for pretend dashing and never driving ENOUGH

Faulty technology, not driving for a month and missing emails are just some of the reasons drivers have had telematics-based car insurance suddenly cancelled, complaints show.

Telematics software is used by many car insurers to monitor how motorists drive and set their premiums accordingly, offering a big discount for safe road use. This tracking relies on a ‘black box’ fitted to a car, the technology in a driver’s smartphone or a combination of both.

These insurance deals are most common among young drivers, who can spend 10 per cent of their salary on car insurance due to insurers seeing them as riskier.

But many drivers have been caught out by the small print, which can lead to policies being cancelled apparently out of the blue.

This has a disproportionate impact on young drivers, as they are required to tell future insurers of the cancellation, which can hike their premiums even further.

Drivers report their telematics policies being cancelled due to apparently small reasons such as not driving for 28 days, missing a warning email, switching their phone’s Bluetooth off, low phone battery and telematics technology not working properly.

These cases are shown in 2024 decisions made by the Financial Ombudsman Service (FOS) for unfair cancellations, 35 of which were upheld in the consumer’s favour.

Why are telematics policies being cancelled? 

In one example, insurer Advantage cancelled the policy of motorist Miss. T because her car had not recorded any journeys for 28 days.

Advantage is an insurer owned by insurance broker Hastings, and is used by Hastings Direct for its YouDrive telematics policy.

The 28-day clause is a common requirement of many telematics policies, as insurers would argue that long periods of getting no data could be a sign of a car being driven without recording enabled, and also give no way of underwriting the risk. The cancellation notice period in many cases is just seven days.

However, in Miss T’s case she was simply travelling overseas without her car, which remained stationary.

The cancellation came as a shock, as Advantage had only relied on sending emails, which had gone into a junk folder unread.

She argued that she had been left without insurance, with a ‘stain on her character’, and that she would now have to pay more for cover. She also said she had to take public transport to get around. 

The FOS said Advantage had acted unfairly, and should have tried harder to communicate before cancelling the policy. The ombudsman ordered the insurer to delete all records of the cancellation and pay £250 in compensation.

A second example, also with Advantage, saw motorist Mr. K have his car insurance deal cancelled because of the 28-day clause. Again, he had simply not been driving his car much, and the FOS sided with him. 

In another example, West Bay Insurance was found to have unfairly cancelled a telematics policy due to ‘excessive speeding’ that was actually a technology error.

The insurer recorded the driver, Mr. F, travelling at speeds of up to 115mph, and ripped his policy up.

But these recordings could not possibly be accurate.

Firstly, his car only had a 1l engine and was capable of a top speed of 99mph according to the manufacturer. Secondly, Mr. F’s car was also recorded as making journeys of up to 37 miles at speeds of below 10mph, an improbably low speed.

West Bay had recognised it was recording Mr. F’s driving incorrectly in February 2024, when it clocked him speeding at 138mph, but then cancelled his policy in March anyway.

The FOS ordered West Bay to cancel Mr. F’s outstanding fees, pay a partial refund, pay £250 in compensation and remove any record of the cancellation.

Another example saw insurer Ageas decline a claim on a telematics policy because it thought the driver, Mr. A, was driving without his telematics black box connected.

This policy required Mr. A to install an app on his phone that should connect to a physical telematics box permanently fitted to the vehicle.

The policy also required his phone to be charged to at least 10 per cent battery in every journey and have Bluetooth enabled, both common features of many telematics insurance deals.

The ombudsman decided that ‘On balance, I’m more persuaded than not, that there was an issue with the operation of Ageas’s telematics device’ and asked the insurer to pay the claim.

What insurers and brokers say 

An Advantage spokesperson said: ‘If a customer does not adhere to the terms of the policy – made clear throughout the purchase and onboarding journey – they may have their policy cancelled. 

‘One of the most common reasons customers are cancelled is as a result of driving while using a mobile phone. We communicate with customers in many different ways (email, SMS and letter) to notify and discuss any cancellation with them, however we acknowledge that in some of the cases upheld by the FOS, our communication could have been better. 

‘We are always looking to enhance our customer experience, with some of our processes since these cases having been improved.’

An Ageas spokesperson said: ‘Ageas’s current telematics insurance offering is sold through brokers as we do not sell or maintain the devices fitted on a telematics policy. We are currently working with our broker partners to look into the issues raised here to ensure policy holders understand what they need to do to ensure their telematics policy is valid.’ 

A West Bay spokesperson said: ‘West Bay Insurance takes customer service very seriously, and we are always concerned when we hear that a customer has had a bad experience. We are investigating what has happened in this instance as we want to ensure that best service is given to policyholders.’