Drivers warned of pricey telematics insurance fees

The use of telematics in car insurance policies has grown seven-fold over the past two years, according to research by Defaqto. But it said many policies come with hefty fees.

There are now 14 car insurers using the technology, which monitors drivers' habits and can help reduce premiums, compared to just two policies in 2011.

Mike Powell, insight analyst for general insurance at Defaqto, explained: "Almost all policies include access to an online dashboard which allows the policyholder to see information about their driving performance. Safer driving with some insurance providers may generate a discount on the insurance premium."

However, if the telematics box flags up bad driving, insurers may use the information to increase premiums.

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Before signing up for a telematics car insurance policy, there are a few other things to watch out for. These mostly boil down to the potential fees drivers may have to pay. Here's Defaqto's list of issues to watch out for if you are considering taking out a telematics car insurance policy:

• Fees charged for missing an agreed appointment time for the fitting of the telematics box can be as much as £100
• Failing to show your insurer a valid driving licence, no claims discount, vehicle registration document and MOT certificate can result in a charge from between £30 to £45 and even see your insurance cancelled
• Cancel a policy mid-term and you could find yourself paying a penalty fee of between £50 and £210. And if you want the telematics box removed from your car, it could cost you anything from £50 to £120
• Get a new car and want your box moved over? It could end up costing as much as £140.

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