Everything you need to know about Usage Based Insurance (UBI)

Learn all about Usage-Based Insurance (UBI): how it works, benefits and how it can help reduce your insurance costs in a personalized way.

Understand usage-based insurance

Can you imagine paying for your car insurance based on how much you actually drive? Sounds like something out of a science fiction movie, right? But in reality, it’s already possible! The concept of Usage-Based Insurance (UBI) has gained a lot of popularity in the United States and is changing the way people think about car insurance.

And before you think that this type of insurance is complicated or full of difficult rules, calm down! We’re going to explain everything very simply, so you can understand if this is the best option for you. At the end of the day, UBI can be a godsend for anyone looking for fairer insurance that suits their lifestyle.

What is Usage-Based Insurance?

Usage-Based Insurance is basically a type of car insurance that takes your driving behavior into account.

In other words, instead of paying a fixed amount every month, your insurance premium can vary according to how much and how well you drive.

Sounds interesting, doesn’t it? The main idea behind UBI is that you shouldn’t pay the same insurance premium as someone else just because you both have the same type of car or live in the same area.

How does UBI work in practice?

Now let’s talk a bit about how UBI works in practice. Normally, to begin with, you choose an insurance company that offers this type of insurance, such as Allstate or Progressive, which have usage-based insurance plans.

When you join, the insurer will provide you with a device that you install in your car or instruct you to download an app on your cell phone. These devices and apps will collect information such as:

How many kilometers you drive each day or week;
Your average speed;
Whether you do a lot of hard braking or sharp turns.

The time of day you drive (driving at night can be considered a greater risk). Based on this data, the insurance company will calculate the amount of your insurance.

What are the advantages of UBI?

Speaking of advantages, one of the great benefits of UBI is personalization. Many people end up paying more for traditional insurance simply because the system doesn’t take their driving behavior into account.

If you are a person who drives little and calmly, UBI can be an excellent way to save money. After all, why pay more if you’re not putting yourself at risk?

Another positive point is transparency. With UBI, you have direct access to the data that influences the price of your insurance.

This means you can track how your actions in traffic impact on the price of your insurance and, if necessary, change the way you drive to pay less.

What’s more, as the data is collected in real time, you can see where you can improve and even have greater control over your safety score.

What’s more, did you know that UBI can help you earn rewards? Some insurance companies offer incentives, such as discounts, for good driving practices. This can motivate you to drive more consciously and, at the same time, save money on your insurance.

If you’re thinking of adopting UBI, the answer depends a lot on your lifestyle and needs.

If you do little driving, in a quiet and safe way, UBI can be an excellent way to save on insurance.

But if you travel a lot or behave more riskily behind the wheel, you might want to look for other alternatives.

Overall, UBI is a fairer way of calculating car insurance and can be advantageous for those who want to pay less.

However, as with everything in life, it’s important to analyze the pros and cons before making the final decision.

If you want to know more about this insurance model, you can take a look at Progressive’s website, which offers more information on how UBI can be advantageous for you. Check it out here!

So, do you like the idea? Maybe usage-based insurance is the smartest way to protect your car and save money at the same time!