What Is Usage Based Insurance? (Ubi)

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The new hot button in the auto insurance world is now Telematics, aka Usage Based Insurance (UBI). But what is it?

Per Wikipedia: Usage-based insurance(UBI) also known as pay as you drive (PAYD) and pay how you drive (PHYD) and mile-based auto insurance is a type of vehicle insurance whereby the costs are dependent upon type of vehicle used, measured against time, distance, behavior and place.

The basic thought on usage based insurance is to charge a more exact premium for the specific risk.

 You may have seen adds from Progressive Snapshot and Allstate Drivewise stating how they can save you money by using their program.

This form of rating is still considered to be in it's infancy and most of these carriers offer very nice up front discounts just to get started with their program, on average around 5-10%. After a set period, the company will then determine what your ongoing discount should be based on the factors their program measures. If you decide that you no longer wish to use this service, you can discontinue at any time.

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What do the insurance companies measure you ask? Most want to know the time of day you are driving, the later at night and early morning hours are given less of a discount than other hours. Some also rate on hard breaking and/or fast acceleration. Others might measure the number of miles driven or location driven to determine your future discounts.

UBI devices differ from company to company. Most plug in to your vehicles diagnostic port. One company has even switched to using an app you install on your smartphone to measure their preferred data. Either way UBI devices or apps are not hard to install. (Companies that use the plug in devices, most will require that you return the device at some point or face a one time cost in the vicinity of $50-100 for not returning the device.)

Thank you for your interest in Usage Based Insurance and Taylor & Associates, if you are ready to begin a car insurance quote  we would love to help you find the best fit of coverage and premium. As an independent agent we offer several options for auto insurance that will give a discount for using telematics. These include Allstate Drivewise, Progressive Snapshot, The Hartford, State Auto Safety 360 and Safeco Insurance RightTrack. If you would like to see what you can save for being a good driver, contact us by phone (937-962-2123), email or web.

Mae Ceniza