A growing number of car insurers are now implementing usage based insurance (UBI) programs that provides good drivers with an additional way to save by lowering their premiums based on their actual safe driving habits.
UBI technology allows an auto insurance company to measure the actual way that a vehicle is utilized, such as how fast it goes, how often the driver has to brake hard, and how far it travels, so that the insurer can more accurately predict the risk posed by the specific driver and offer rates that are specific to the use of that vehicle.
Usage based insurance installs a device in the vehicle that provides basic data about its use.
The onboard diagnostic port (ODP) in the car is connected to the device, which can then send information to the insurer’s servers, which is stored so that it can then be analyzed and managed within its databases. Once the insurer analyzes the data, that information can be used to assign a score to the driver so that a premium that is more accurate to his or her unique driving patterns can be calculated.
The data includes how much the car moves forward, backward, left, right, and even up or down. It can then determine how frequently and how hard braking occurs, how fast you typically go, how often you turn, and how much driving on hills you experience.
If the score that is calculated shows that a particular driver is a low risk – for example, because the car isn’t used much and barely brakes hard – then a discount can be offered to the driver. Many programs say that drivers who participate in the usage based insurance are saving up to 20 percent, while others say that good drivers who barely use their vehicles can see discounts of up to half the premiums that they had previously been paying.
Different insurers have unique technologies for their usage based insurance, measuring various factors and assessing the habits of the drivers in different ways. Some programs require a vehicle to have an internal system already built in, while others are compatible with most models of vehicle from the last decade or so.