Posted on: Dec. 19, 2016 in Cars, Auto Insurance

Usage based insurance, or UBI, is becoming an increasingly popular type of car insurance. You may have heard of it by some of its other names such as pay-as-you-drive, pay-how-you-drive, telematics, or mileage-based insurance. Essentially, it all comes down to the same thing though: Your car insurance rates are based on how you use your car.


Historically, a number of factors have gone into how your car insurance is rated. Where you live, the type of car you drive, how much you drive (based on the honor system), and information about safety features and anti-theft devices all come into play. Insurers also look at your driving record, credit score, age, marital status, and occupation to get an idea of what kind of driver they think you might be. To some extent, all of these things could point to the likelihood you’d get into an accident or how high the risk is of your car being stolen, but it’s impossible for an insurer to truly understand how you drive your car unless they’re sitting there alongside you.

Technology has made it so that now the insurance company practically can be there with you. Some companies are giving their customers the option to install a telematic device that will monitor various driving habits and report that data directly to the company. Some customers have seen their insurance rates drop as much as 30 percent by agreeing to participate in these programs.

While some may feel that these telematic devices are an invasion of privacy, surveys have shown that the majority of drivers, upwards of 80% in some polls, are willing to use the devices if it means they’ll save money on their insurance. It’s unclear, however, if drivers are more apt to use a devise provided by their insurer or a smartphone app to measure their driving patterns.

Some of the driving behaviors monitored by the devices include hard stops and quick accelerations. These indicators can give evidence to whether a driver is distracted or if they avoid sudden movements. Telematics can also look at the miles traveled over a period of time as well as the time of day when the car is in use. If a car is rarely driven, driven only locally, or is driven outside of high traffic commute hours, a lower rate could be possible since there’s less chance for a collision. 

If you’re interested in usage based insurance, reach out to your auto insurance carrier to see what they have available to you. You can also do an internet search of insurance companies to learn more about the programs various companies offer. If you’re a safe driver, the potential savings could be big!

If you need auto financing but your credit is keeping you from getting approved, CreditYes can help! We can match you with a dealership in your area that will be with you every step of the way. Our service is fast and free. Fill out our secure online application and get behind the wheel of your next car today!