Usage-based insurance, sometimes written as UBI, is a form of insurance where your insurance expense is based on the kind of vehicle you drive, your driving behavior, distanced traveled, and more. Essentially, your insurance provider will provide you with a black box or phone app that tracks the factors listed above. You can receive discounts for being a “safe driver” and for driving fewer miles than you were quoted for.
Thanks to the widespread availability of the kind of technology needed to make usage-based insurance a reality, many insurance providers offer UBI as a money-saving insurance tool. Once the black box or other device has been connected to your car, your insurance provider will record and log your driving activity.
If you don’t have the best driving habits, fear not, as policyholders are not penalized or charged more for less than perfect driving.
A usage-based policy is a winning situation for both the policyholder and the insurance provider since the policyholder will have a financial incentive to drive safer, thus lowering the chances of an accident or claim. Another advantage to take note of is that you will not be required to update your insurance policy due to life changes.
For instance, if you decide to quit your long distance job and work closer to home, the change in driving miles will automatically affect your insurance premium without you having to call in and lower your annual mileage.
If you have been classified as a risky driver due to past claims and tickets, signing up for a UBI policy can potentially save you thousands of dollars in insurance expense. Remember, UBI policies are optional and not mandatory, so be sure to read customer reviews or testimonials online of your insurance providers UBI program. If you have any specific questions about what exactly your insurance provider will track and log, its best to give them a call and speak to a representative.
Another benefit of a UBI policy is that it allows you to track your own driving habits and see what you can improve on to become a safer driver and save money. Although less than 10% of Americans have a UBI policy, the money-saving device is growing in popularity with users and insurance providers around America.
Car related expenses such as insurance, fuel, and car payments can compile and add up quickly. Although usage-based insurance has a tendency to be more cost-effective, be sure to conduct research on which providers are known for providing the lowest rates in your local area. Saving money through a UBI insurance policy can help you save money for other future expenses.
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