Understanding Usage Based Insurance
Usage Based Insurance, commonly known as UBI, is a innovation in the auto insurance industry. It promises more control over your rates and lower costs for policyholders. If you are not familiar with this coverage type, you should read our blog. We also invite to spend more time on our website and get online auto quotes, for free.
Usage-based insurance (UBI), also called “telematics,” is a coverage type in which the auto insurer monitors and tracks your driving behavior through a device installed in your vehicle These wireless devices transmit data in real time back to insurers, such as:
- Driven miles per day
- Time of day or night when you drive
- Where you drive the vehicle
- If you rapidly accelerate, rapidly decelerate, and/or take corners hard
- If airbags are deployed fast enough
Insurers use the data they collected in order to help determine your customized insurance premium. To figure out how much you will pay in premiums, your insurer may combine the telematics data with traditional factors typically used by the auto insurance industry.
If you drive shorter distances at slower speeds in the daytime, for example, you will probably pay less than someone who drives longer distances at night and rapidly accelerates when taking hard corners. UBI associates costs with individual and current driving behaviors, which may help you break away from traditional auto insurance factors that influence how much you’ll pay in premiums.
Linking insurance premiums to your driving performance allows insurers to price premiums more accurately. Your premiums may go up or down depending on your driving behavior. If you are a good driver, you will see the premium cost go down after signing in for UBI. As long as you are comfortable being monitored by the insurer, UBI is the right choice.
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