Pay-As-You-Drive and Usage-Based Auto Insurance (Best Companies + Savings)

Usage-based auto insurance by definition tracks your mileage and driving behavior to determine insurance rates. Insurance companies keep track of your driving with a mobile app or in-car plug-in device. This list of the best usage-based auto insurance companies will help you save money on car insurance.

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D. Gilson is a writer and author of essays, poetry, and scholarship that explore the relationship between popular culture, literature, sexuality, and memoir. His latest book is Jesus Freak, with Will Stockton, part of Bloomsbury’s 33 1/3 Series. His other books include I Will Say This Exactly One Time and Crush. His first chapbook, Catch & Release, won the 2012 Robin Becker Prize from Seve...

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Written by D. Gilson, PhD
Professor & Published Author D. Gilson, PhD

Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insuranc...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years Leslie Kasperowicz

UPDATED: Jun 1, 2022

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usage-based insuranceStats
Number of UsersAn estimated 10 to 11 million
telematics-enabled insurance policies
Estimated SavingsInitial enrollment discounts offered for most programs
Advertised savings of up to 52% on standard premiums
Participating CompaniesVariations offered by each of the top 10 automobile insurers
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The numbers speak for themselves.

  • Investments in the tens and hundreds of millions of dollars.
  • An estimated 10 to 11 million insurance policies in place.
  • A global market projected to amass $123 billion by 2022.

They’re all factors driving the growth of Usage-Based Car Insurance, also known as UBI.  But this expansion isn’t just about revenues and high-dollar investments.

It’s the prospect of significant savings and individually-tailored insurance plans that’s driving consumers to switch to usage-based car insurance.

In spite of a growing demand for UBI, many questions remain. How does it really work? What options are available? And, most importantly, how is it impacting drivers?

It’s with these questions in mind we’ve set out to provide this point-by-point guide. We’re not only explaining how usage-based insurance works, but we’re also revealing which companies offer UBI, and what your potential savings could look like.

Your journey begins by choosing the right car insurance coverage. Use our free tool to compare rates and explore the best online discounts by company.

What is Usage-Based Insurance?

Simply put, usage-based insurance is a type of car insurance policy that tracks your mileage and driving behaviors. UBI has also been referred to as Pay-As-You-Drive (PAYD) and Pay-How-You-Drive (PHYD) insurance.

Insurers claim that the more closely they can monitor your driving, the more accurately they can assess your premiums. For some drivers, this can result in significant discounts.

Although UBI isn’t exactly new (it’s been around for more than a decade), the form of insurance has made significant strides in recent years.

Just ask the experts.

Take this Allied Market Research report. Researchers project an annual growth rate of 36.4 percent from 2016 to 2022.

Or, take the National Association of Insurance Commissioners (NAIC). The association estimates that by 2020, 70 percent of all auto insurers will use telematics, the technology behind UBI. 

It’s clear — the interest in usage-based-insurance isn’t slowing down anytime soon. All of these projections begin to make sense when you hone in on the claims coming from car insurance companies —

“An average of $145 in discounts”

“Savings of up to 20 percent” 

“A flexible monthly rate”

And while the idea of saving money is always appealing, knowing the “why” and the “how” is just as important. 

What is Telematics?

Understanding a usage-based program for car insurance first begins with understanding telematics.

According to GPS Insight, telematics is simply the “long-distance transmission of computerized information.”

When applying telematics to cars, the process begins with data collection by an in-car device, system, or mobile app. The data is then sent to car insurance companies through the use of cellular networks.

If you understand computer programming, then you have an idea of how computer programs have been designed to run your telematic information to develop your driver profiles.

How Do Car Insurance Companies Track Your Driving?

In the absence of directly observing drivers, insurance companies rely heavily on technology to track your driving. For most insurance companies, this technology will typically come in the form of a plug-in device, a mobile app, or a system already embedded in your vehicle. 

This, in turn, requires drivers’ cooperation and consent.

  • Cooperation in having specific devices installed in your car, or driving with certain apps.
  • And, consent in allowing companies to collect data.

In-Vehicle Devices

A number of UBI programs like Progressive’s Snapshot will provide drivers with a small telematics device (sometimes called a “dongle”) to plug into their car. These devices can be best described as small pieces of hardware that plug into your car’s on-board diagnostics port, also known as an OBD-II port.

Why this port? Because it’s used to access a car’s computer. In most cars, the OBD-II port is under the dashboard and beneath the steering wheel. Here’s an example of an OBD-II port in a Dodge Caravan Minivan, as pictured on Progressive’s website:

It’s important to note that OBD-II port technology may not be available in older cars. Experts say these ports became universal in vehicles built after 1996. However, you’ll want to verify this with specific automakers.

Mobile Apps

Rather than using a plug-in device, some companies opt to use mobile apps as their method of tracking. (Some companies, like Progressive, offer a choice between the two). How these apps function will vary from provider to provider.

For instance, State Farm’s Drive Safe & Save app connects with a Bluetooth beacon that the company sends after you’ve enrolled. From there, you’ll have to keep your Bluetooth and location services on in order for trips to be recorded.

Embedded Devices

For some drivers, using a device or an app may not be necessary as their cars are already equipped with telematics software. For instance, cars with OnStar have the capability of collecting and sharing real-time data. Other examples include Ford’s SYNC, BMW’s ConnectedDrive, and  Toyota’s Connected Services system.

It’s important to note that just because a car is equipped with telematics software doesn’t mean that your insurer still won’t ask you to use their app or device. However, that is changing, as more vehicle makers and insurers are moving to make the best of both.

Case in point — Toyota.

The automaker recently invited drivers whose cars are outfitted with Connected Services system to participate in a new usage-based insurance program under Toyota Insurance Management Solutions, or TIMS.

What Are Car Insurance Companies Tracking?

Here’s the deal — knowing what insurers are tracking is the core of what distinguishes UBI from typical insurance. But before we get to the “what,” it’s important to understand the “why.”

Car insurance companies have a long history of assessing drivers’ rates based upon a number of key factors. Whether it’s where you live, the length of your commute, or your driving record, insurers will look to these factors to determine your level of risk. The higher the perceived risk, the more you can expect to pay.

But this is where usage-based insurance comes in. Rather than assuming certain driving patterns and risks on the front end, UBI will utilize technology to track your driving then assess rates.

This leads us to examine what behaviors car insurance providers are tracking. While each insurer will differ on what they’re monitoring, there are some common factors:

  • Tracking location or direction can help insurers gauge if drivers are more frequently in areas known for high crime.
  • By monitoring behaviors like braking and speedinsurance companies will assess whether you’re an aggressive driver.
  • Some insurers will charge more for drivers who drive long distances. Monitoring things like trip duration and distance will give insurers more accurate data.
  • By tracking behaviors like turning and cornering, insurance companies can predict the chance of rollovers
  • Monitoring road types can give insurers additional insight into where accidents are occurring.

What form of UBI is Best For You?

As the National Association of Insurance Commissioners reports, there are some variations within usage-based insurance. Some plans will focus more on how you drive, where others are focused more on how many miles you drive.

Saving Money as a Safe Driver

Many UBI programs focus heavily on whether you’re a safe driver, and as a result, will monitor a variety of factors. The better you drive, the more likely you are to receive a discount.

Take Allstate’s Drivewise program. This program looks at how fast you’re driving, when you’re driving, and how you’re driving.

Keep in mind, it may require a few months of driving with an in-vehicle device or app before you start seeing savings. The amount of time will vary from provider to provider, but for many, that can be four to six months.

Pay-Per-Mile Insurance

If you’re a low mileage driver, pay-per-mile insurance might be the choice for you. In most of these programs, drivers are charged a base rate, as well as per-mile rate each month. For example, let’s say

  • Your base rate is $48 a month, and your per-mile rate is $.06 per mile.
  • This means if you drive 500 miles in one month, you’ll be charged 500 x .06, or $30, plus your base rate.
  • Therefore, your bill for the month would be $48 + $30, or $78

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Car Insurance Companies with the Best UBI

Consumers interested in UBI have good news — you have options. And a lot of them.

Drivers can not only find usage-based options among the nation’s top 10 car insurance companies, but they can also find options among many new and emerging companies like Root and Metromile.

But where gathering all of this information may seem time-consuming, we’ve included what you need to know in this guide.

For the next few moments, we’re providing a company-by-company break down of your UBI options — including how each program works, and what your potential savings look like.

Major Car Insurance Companies with UBI

It was the year 2008, and Progressive Insurance took a bold, new step — introducing the first wireless telematics device for personal vehicles.  It’s a move many experts recognize as a pioneering step in what’s become known as today’s usage-based insurance.

Gradually, more and more car insurance companies followed suit, to the point where each of the country’s top ten providers (in private passenger auto) now offers some form of UBI.

Allstate Drivewise

The basics: The Allstate Drivewise program focuses on safe driving. Drivewise is open to both customers and non-customers, and can be accessed through a device or app.

How to participate: 

  • Customers and non-customers can begin by downloading the app. Drivers who are not customers will be directed to a “Drivewise only” option.
  • Customers opting to use the plug-in device will need to contact their agent to sign up. A device will be mailed to your home, along with instructions.
  • You can review your performance on the app, even if you’re using the device.

What’s being tracked: 

  • Safe speed
  • Braking
  • Time of day
  • Mileage

Potential savings:

  • With the device, you can earn up to 10 percent when you sign up, and up to 30 percent every six months for safe driving. For finishing challenges, you can also earn Allstate Rewards® Points that can be used toward travel, gift cards, and more.
  • With the app, you can earn up to 10 percent cash back for signing up, and up to 25 percent cash back every six months for safe driving. You can additionally earn Allstate Rewards® Points towards purchases.

American Family KnowYourDrive

The basics: The American Family KnowYourDrive program centers around safe driving habits and tracks driving through an app. The company promises that your premium will not increase through participation in this program.

How to participate: Customers can enroll by contacting their agent. Drivers will then be directed to download the app, which calculates a driver’s score. This score will be used to determine your discount.

What’s being tracked:

  • How often you drive
  • Braking
  • Acceleration

Potential savings: American Family promises a 5 percent discount for signing up, and up to 20 percent in savings. The lowest discount you can receive is 2 percent.

Farmers Signal®

The basics: The Farmers Insurance Signal® program uses an app to monitor safe driving habits. This program is not available in all states, and discounts will vary from location to location.

How to participate: 

  • Contact your agent for a quote and ask to enroll in the program
  • Your agent will then text you a link with instructions on how to download the app

What is being tracked:

  • Speeding
  • Braking
  • Distracted Driving
  • Location
  • Mileage

Potential Savings: A 5 percent discount for signing up and completing 10 qualifying trips. Up to 15 percent savings at renewal. Additional savings may be possible when multiple drivers on one policy enroll, including those under the age of 25.

Geico DriveEasy

The basics: Geico’s DriveEasy Program utilizes an app to track and score your driving behavior. Multiple drivers on one policy can participate. Where Geico’s program differs is that it does not appear to offer any discounts.

DriveEasy began as a pilot program with a test group in June 2019, under the name “Geico Drive.” The program has since expanded and is open to all customers.

How to participate: Simply download the DriveEasy app, type in your phone number, and enter the code.

What’s being tracked:

  • Speeding
  • Braking
  • Phone Use
  • Time of day
  • Distance

Potential savings: Neither Geico’s DriveEasy page nor its FAQs indicate a driver discount. However, with the program still in its infancy, it’s possible discounts could be offered to customers down the road.

Liberty Mutual RightTrack®

The basics: The Liberty Mutual Insurance RightTrack® program uses an app and promises potential savings for safe driving.

How to participate: After enrolling in the program (you can do so online or through an agent), download the Liberty Mutual RightTrack app. Your download will trigger the shipment of a device, which needs to be linked to your app. Drive for 90 days to confirm the discount.

What’s being tracked: 

  • Braking
  • Acceleration
  • Nighttime driving
  • How many miles you drive.

Potential savings: Liberty Mutual promises an unspecified discount for signing up, and up to 30 percent savings for the life of your policy.

Nationwide SmartRide®

The basics: The Nationwide Insurance SmartRide® program offers potential savings for safe driving. This program lasts four to six months.

How to participate: This program requires the use of a device. Contact your agent to sign up.

What’s being tracked:

  • Miles driven
  • Hard braking and acceleration
  • Idle time
  • Nighttime driving

Potential savings: Nationwide promises a 10 percent discount for signing up, and potential savings of up to 40 percent.

Progressive Snapshot

The basics: The Progressive Insurance Snapshot program looks at your overall driving habits and mileage. Multiple drivers on one policy can participate.

It should be noted that your rates can go up as a result of high-risk driving. However, the company claims only two out of ten drivers see an increase.

How to participate: Drivers can participate with a plug-in device or the mobile app. Where the app isn’t available, customers can use the device. Customers also have the option of enrolling in a 30-day trial.

What’s being tracked:

  • Time of day you drive
  • Hard braking and rapid acceleration
  • The amount you drive
  • How you are using your mobile phone while driving (app users only, in participating states)

Potential savings: An average $26 discount for signing up, and an average discount of $145 savings upon program completion (about six months). Discounts are not available in the following states: AK, CA, HI, NC, or NY.

State Farm Drive Safe & Save

The basics: As suggested by the name, State Farm’s Drive Safe  & Save program offers savings based upon safe driving.

How to participate: Drivers can choose to use the app or their vehicle’s OnStar system.

  • To download the app and enroll, text SAVE to 78836. Setup will be complete upon the receipt of a Bluetooth beacon sent by State Farm.
  • Drivers with OnStar are asked to enroll in OnStar Vehicle Diagnostics (OVD) within 30 days of enrolling in Drive Safe & Save. State Farm will then request odometer information from OnStar within 30 days of you signing up.

What is being tracked:

  • Annual mileage
  • Braking
  • Speed
  • Time of day travel
  • Acceleration
  • Fast cornering

Potential savings: Up to 5 percent for signing up (per vehicle), and up to 50 percent in savings. According to the website: “Your discount is adjusted at each policy renewal (typically every six months). Changes in your driving will be reflected in your discount amount, so your discount amount can increase or decrease at each renewal.”

Travelers IntelliDrive

The basics: The Travelers Insurance IntelliDrive program focuses on safe driving behavior. IntelliDrive works by a smartphone app and runs for 90 days.

IntelliDrive is available in the following states (note that program rates and savings will vary by state): AZ, AL, CO, CT, DC, FL, GA, IA, ID, IL, IN, KS, KY, MD, ME, MN, MO, MS, MT, NE, NH, NJ, NM, NV, OH, OK, OR, PA, SC, TN, TX, UT, VA, VT, WA, WI

How to participate: The IntelliDrive program requires an app, and can be used by multiple drivers on one policy. Travelers will send participants a link to download the app.

What’s being tracked:

  • Time of Day
  • Acceleration
  • Speed
  • Braking

Potential savings: Ten percent for signing up, and potential savings of up to 30 percent at renewal if you’ve driven 13,000 miles or less in a year. Note that riskier driving habits may result in higher premiums, depending on the state you live in.

USAA SafePilot

The basics: The SafePilot program by USAA rewards members for safe driving. Simply put, “The better you drive, the bigger the discount you’ll earn.” Remember — USAA is only available to members of the military community.

How to participate: Participation requires downloading the USAA SafePilot app, available on iOS and Android.

What’s being tracked:

  • Phone handling and hands-free phone use
  • Braking

Potential savings: Earn 5 percent for enrolling, and up to 20 percent at renewal.

Other Usage-Based Insurance Options

They may not be among the nation’s top 10 car insurance providers, but they do offer options.

Here’s a list of additional companies offering usage-based insurance:


The basics: The DriveSense app by esurance focuses on safe driving, and is available for use by both customers and non-customers. Customers, however, are eligible for discounts. The program is not available in every state, but the list continues to grow. Click here to learn more.

How to participate: Drivers who aren’t existing customers will be automatically enrolled upon getting a quote. Existing customers can enroll here. Once you have the app up and running, you must log at least 50 trips per term.

What’s being tracked: The esurance site simply states that driving patterns and behaviors are being tracked

Potential savings: Customers can get an unspecified discount for enrolling. Average savings are estimated at $100

The Hartford TrueLane

The basics: TrueLane by The Hartford Insurance uses a plug-in device, and offers potential discounts based upon safe driving.

The company notes that its device is not able to obtain accurate information from electric, hybrid and diesel vehicles.

How to participate: Enroll online or by calling The Hartford at 1-888-413-8970. The program typically requires 180 days of driving with the device. Once this period is completed and a discount has been determined, you’ll be asked to mail in the device. Not doing so can result in a $100 penalty.

The program is currently being offered in the following states: Arizona, Arkansas, Connecticut, Minnesota, Missouri, Nevada, New Mexico, Oklahoma, Oregon, South Carolina, Virginia, and West Virginia.

What’s being tracked: The website states that driving results “such as speeding and braking” will be monitored.

Potential savings: Receive a 5 percent discount for signing up. Discounts of up to 25 percent per vehicle upon renewal, based on driving habits. The average discount ranges from 10 and 12 percent.

MetLife MyJourney

The basics: The MyJourney program by MetLife uses an app, and promises potential discounts for safe driving. It is currently available in the following states: CT, DE, IA, ME, MI, MN, ND, NJ, UT, WI.

How to participate: Begin by enrolling in the program with your agent. Within 24 hours, you’ll receive a text message with a link to download the app. The program lasts 6 months, but MetLife assures that you can keep your discount through the life of the policy.

What’s being tracked: The site simply states that how you drive and when you drive will be monitored.

Potential savings: Up to 10 percent for enrolling, and up to 30 percent at renewal.


The basics: Root Insurance is a relatively young company that has, for lack of a better term, quickly taken root since its founding in 2015. The company focuses on offering lower rates based on safe driving.

While Root is not available in every state, it is available in most states and is expanding. Click here to learn more.

Among the coverages offered by Root are:

  • Collison
  • Comprehensive
  • Bodily injury
  • Property damage
  • Under/Uninsured Motorist
  • Medical payments coverage
  • Personal Injury Protection
  • Rental
  • Roadside assistance

How to participate: Drivers looking to save will need to download the app and take a test drive. Driving will be measured for two to three weeks.

What’s being tracked:

  • Braking
  • Hours
  • Turns
  • Consistency

Potential savings: The company advertises savings of up to 52 percent on standard car insurance rates.

— Safeco RightTrack

The basics: The RightTrack program by Safeco uses a plug-in device to monitor your driving. Discounts can be earned based on safe driving behaviors.

RightTrack is available in the following states: AR, AL, AZ, CO, CT, FL, GA, IA, ID, IL, IN, KS, KY, LA, MA, MD, MI, MN, MO, MS, MT, ND, NE, NH, NM, NV, NY, OH, OK, OR, PA, SC, SD, TN, TX, UT, VA, VT, WA, WI, WV, and WY.

How to participate: Interested drivers can begin by contacting their agent. Upon receiving the device and beginning the program, the company will monitor your driving for 90-days.

What’s being tracked:

  • Time of day
  • Miles you drive
  • Hard braking
  • Rapid acceleration

Potential savings: Drivers can receive an unspecified discount upon enrollment, and a discount between five and 30 percent for the life of their policy.

– Pay-Per-Mile Car Insurance Options

Stay-at-home moms. Work-from-home employees. Carpoolers. Bike Riders.

What these groups (and many more) have in common is the tendency to drive fewer miles than the average motorist.  Rather than paying higher-than-normal rates, several insurers offer plans that cater to their needs.

Allstate Milewise

The basics: Allstate’s Milewise is a pay-per-mile program that uses an app and a plug-in device.

Milewise is only available in a handful of statesWashington, Oregon, Idaho, Arizona, Texas, Illinois, Indiana, Ohio, West Virginia, Virginia, Maryland, Delaware, and New Jersey.

How to participate: Begin by contacting your agent. Upon enrolling, you’ll receive a plug-in device that works in sync with the Milewise app.

What’s being tracked: Beyond just tracking miles, this program also looks at the following:

  • Miles driven
  • Speed
  • Time of day
  • Specific driving events (like sudden braking)
  • Location

Potential savings: This will vary from driver to driver, as Allstate states, “Your daily rate and per-mile rate are calculated based on characteristics such as driver age, vehicle type and driver history, similar to a traditional auto policy.”  To get a quote, go to the Milewise site.

Esurance Pay Per Mile

The basics: According to the company, this pay-per-mile program is “responding to consumer demand for alternative insurance options for those who drive less, opting to walk, bike, or take public transportation instead.”

As of now, this program is only available in Oregon.

How to participate: To enroll, speak with an agent. Drivers participating in the program will receive a plug-in device to monitor mileage. Customers will also receive instructions to set up an Esurance Pay-Per-Mile account, enabling them to set alerts and track driving.

Drivers taking long trips will only be charged for the first 150 miles.

What’s being tracked: Esurance only tracks miles and location for this program.

Potential savings: Savings will vary from customer to customer, depending on mileage.

Liberty Mutual ByMile

The basics: ByMile is the Liberty Mutual’s pay-per-mile auto insurance program, and works with a plug-in device. According to the website, “Your premium will consist of your base rate + your per-mile rate (which is calculated based on the distance you drive). No other driving events will affect your premium.” 

Right now, this program is only available in Illinois.

How to participate: Contact your agent to participate. Once enrolled, you will receive a plug-in device for tracking. You can also download the ByMile app to view your data in real-time.

What’s being tracked: According to the Liberty Mutual, only your miles will be tracked.

Potential savings: Savings will vary from driver to driver.


The basics: MetroMile is another relatively new company growing in popularity. Founded in 2011, the company offers insurance designed for low-mileage drivers, charging a base rate (as low as $29) and a subsequent per-mile rate. This mile uses an app and a device.

For long distances, MetroMile only counts the first 250 miles per day (150 miles/day in New Jersey).

Among its coverage options, Metromile offers:

  • Collison
  • Comprehensive
  • Bodily injury
  • Property damage
  • Under/Uninsured Motorist
  • Medical payments coverage
  • Rental reimbursement
  • 24/7 roadside assistance

MetroMile is available in the following states: Arizona, California, Illinois, New Jersey, Oregon, Pennsylvania, Virginia, and Washington.

How to participate: Interested drivers will need to contact the company for a quote. Customers who are enrolled will receive a plug-in device that connects to an app.

What is being tracked: The site claims to only track your mileage.

Potential savings: This will vary from driver to driver, but a testimonials on their site claim varying annual savings as high as $1,140.


The basics: Mileauto‘s pay-per-mile insurance has a simple premise — “Pay when you drive. Save when you don’t.”

Mileauto is currently only available in Oregon and Illinois, but the company has plans to expand.

Mileauto charges customers a standard base rate and a per-mile charge. According to the site, drivers’ base rate and per-mile rate will be determined based upon standard insurance variables, like driving history, location, etc.

Among the coverages offered by Mileauto are:

  • Minimum liability (bodily injury and property)
  • Comprehensive
  • Collision
  • Rental vehicle reimbursement
  • Roadside assistance

How to participate: Mileauto doesn’t use an app or tracking device. According to the site, participants need only to snap a photo of their odometer and send it to the company.

What’s being tracked: Only miles are being tracked.

Potential Savings: While this will vary from driver to driver, the site claims that customers can save 30-40 percent off of standard insurance rates.

Nationwide SmartMiles®

The basics: SmartMiles® is Nationwide’s pay-per-mile program and uses an in-vehicle device. Your premium consists of a base premium and a cost-per-mile rate.

Nationwide will only count the first 250 miles of a long road trip.

How to participate: Customers will need to contact an agent to begin and to receive the in-car device.

What is being tracked: Nationwide focuses primarily on tracking miles, and gives customers the option of reviewing their mileage online.

Potential savings: Savings will vary from month to month. However, Nationwide offers up to a 10 percent safe driver discount after the first renewal.

Pros and Cons to Usage-Based Insurance

When it comes to how drivers view usage-based insurance, most will fall into one of two categories — big savings or big brother.

In fact, a 2017 consumer survey by Willis Towers Watson shows that the willingness to share driving data for personalized insurance quotes varies among age groups, as illustrated in this image:

Indeed, these statistics show that when comparing Millenials, Generation X-ers, Baby Boomers, and older drivers — the willingness to share data decreases with age.

In spite of UBI’s many advantages — ranging from savings to safer driving habits — a number of concerns remain, primarily those centered around privacy.

For the driver who’s still unsure about the merits of usage-based insurance, we’re taking the next few moments to explore its pros and cons.

The Pros

From an expedited claims process, to documented safe-driving habits.

Here are some of the pros of usage-based insurance:

UBI: The Pros  
Savings tied to safe driving, with discounts available upon enrollmentImproved driver habits in distracted driving and hard braking
More personalized policies
and a more accurate driver profile
Expedited and more accurate
claims process
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Our comprehensive review of UBI programs shows a common theme — most insurers will offer a discount simply for signing up. But beyond that, drivers who perform well are earning savings. In some cases, those savings remain on their policies long after the monitoring process has ended.

Another advantage to usage-based insurance is having a policy that’s truly reflective of your driving habits. And for low-mileage drivers — like stay-at-home moms or those who work from home — choosing a pay-per-mile option could yield a significant return.

Additionally, studies have shown that drivers enrolled in safe-driving UBI programs are making conscious decisions to improve their habits. In fact,

Finally, UBI technology has proven to be beneficial in the claims process.  Nino Tarantino, CEO of Octo Telematics North America, says that cars with telematics devices that become involved in car accidents provide a powerful tool — real-time data.

Insurers can turn to the devices and quickly learn “where the car was damaged, the extent of the damage, the probability of bodily injury, and what other car was involved.”

The Cons

From privacy concerns, to rate increases.

Here are some of the cons to usage-based insurance:

UBI: The Cons 
Privacy concerns over data and GPS trackingInability to distinguish between drivers
May not be available in older carsRatings increases can occur
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Privacy Concerns and UBI

Privacy continues to be a top concern among those who are skeptical of usage-based insurance. After all, drivers must consent to allow car insurers access to personal details such as their location, and data stored in their car’s computer.

Many insurers assure drivers that they are not selling your information to third parties (as an example, see Liberty Mutual’s privacy policy on this FAQ page, or this privacy statement from Progressive’s Snapshot). However, for many, these assurances are simply not enough.

Additionally, the rise in UBI has led to advocates pursuing increased protections. In 2019, Massachusetts lawmakers introduced several bills aimed at limiting who can access a manufacturer’s OBD system.

Other Concerns with UBI

Consumer advocates and experts have raised additional concerns regarding the use of plug-in devices:

  • One is that these devices will only work in cars built after 1996.
  • Another is that a plug-in device does not distinguish between drivers, which can lead to inaccurate driver profiles.

Finally, it should be reiterated that for some drivers, usage-based insurance may not result in savings. While several companies promise that your rates won’t go up, others (like Progressive and Travelers) do not make that guarantee. These companies clearly state that risky driving behavior can result in higher rates.

Usage-Based Insurance: The Bottom Line

For many drivers, usage-based insurance may prove to be profitable. However, those who are willing to take the plunge with UBI need to be prepared to bet on their driving.

Remember, key habits such as hard braking and rapid acceleration will be tracked. Drivers will need to ask themselves just how confident they are in their driving, and if their driving is worthy of a discount.

Perhaps the group that stands to benefit the most from UBI are low-mileage drivers. With low base costs and pennies-on-the-mile rates, drivers who rarely get behind the wheel could end up with tremendous savings.

Of course, none of these potential savings are possible unless you’re willing to consent to be tracked. For many, this remains a point of contention.

Bottom line? If you’re still unsure about usage-based insurance, it never hurts to speak to an agent, or pursue programs that offer trial periods.

One thing is for sure — UBI is growing rapidly. And we’re pretty sure what we’re seeing now is only the beginning.

You can begin your journey into UBI by exploring the best discounts available by company. Take advantage of our online tool below.

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