What Is Usage-Based Car Insurance

If you just recently got involved in the auto insurance market, you have surely seen advertising and articles about Usage-Based Insurance (UBI).  Check the following guide about usage-based car insurance and visit our website for car insurance quotes online free.

# Save-Money-On-Car-LeaseUsage-based Insurance is an extension of telematics technology which merges telecommunications and information together using wireless data connectivity. Usage-based insurance is a new type of technology-driven automobile insurance where insurance premiums depend on driver’s behavior.  The basic principle behind UBI is outlined in its name; you pay only for what you use. By proving that you’re a good driver or don’t put a lot of miles on your car, insurers will lower your premiums – sometimes up to 50%. You can’t get that kind of discount using traditional car insurance plans, no matter how many defensive driving courses you take.

A small wireless device is plugged into a vehicle’s diagnostic port to collect driving information:

  • Braking
    • Acceleration
    • Distance traveled
    • Time of day driven
    • Cornering
    • Speed

UBI programs have many advantages to insurers and drivers.  Connecting insurance premiums more closely to actual individual vehicle or fleet performance allows insurers to more accurately determine the cost of insurance. This increases affordability for lower-risk drivers, many of whom have limited financial possibilities. It also gives drivers the chance to control their insurance costs by encouraging them to reduce miles driven and adopt safer driving habits. Fewer miles and safer driving also aid in reducing accidents, congestion, and vehicle emissions, which benefits all of us.

The use of telematics helps insurers more accurately estimate accident damages and reduce fraud by enabling them to analyze the driving data during an accident. This additional data can also be used by insurers to refine or differentiate UBI products. Additionally, the supplementary safety benefits offered in conjunction with many telematics-based UBI programs also help to lower accident and vehicle theft related costs by improving accident response time, allowing for stolen vehicles to be tracked and recovered, and monitoring driver safety.

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