Usage-Based Insurance
What Does Usage-Based Insurance Mean?
Usage-based insurance (UBI) is a type of car insurance that enables the insurer to track the policyholder’s driving behavior using a monitoring device installed in the vehicle. Instead of basing premiums solely on the driver’s risk class, the rate is partially determined by the data collected from the device.
Insuranceopedia Explains Usage-Based Insurance
Usage-based insurance offers a new way to reduce the cost of car insurance. By using a telematics device to monitor the driver’s behavior and the condition of the vehicle, insurance companies offering UBI can lower premiums if the data indicates that the policyholder demonstrates safe driving habits.
Additionally, the data provided through UBI can encourage good driving by alerting drivers to potentially dangerous behaviors. As a result, this form of insurance can help prevent accidents not only for the insured but also for other motorists.
