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Definition
Usage-based insurance (UBI) is auto coverage priced by your actual driving behavior, captured through a smartphone app or a plug-in device rather than estimated from traditional rating factors alone. Telematics systems track things like mileage, hard braking, speed, and time of day you drive. Well-known programs include Progressive Snapshot and State Farm Drive Safe & Save. Based on the data collected, your insurer adjusts your rate, so safe, low-mileage habits can lower your premium—but risky patterns can also raise it. Discounts, eligibility, and exactly which behaviors are scored vary by company and by state, so the impact on your bill depends on the program you enroll in. Participation is typically voluntary, and you usually need a monitoring period before your adjusted rate is set. Always review what data is collected and how it's used before you sign up.
Also Known As
UBI
Telematics insurance
Pay-how-you-drive insurance
Pay-per-mile insurance
Used in Context
- After six months of low-mileage, gentle-braking driving, her Progressive Snapshot data earned a meaningful premium discount at renewal.
- He enrolled in State Farm's Drive Safe & Save to see whether his short commute could lower his monthly bill.
- A shopper comparing quotes through Dreamy Leads asked whether a telematics program might help offset a recent rate increase.
Can usage-based insurance raise my premium?
Yes. While telematics often rewards safe driving with discounts, programs can also raise your premium if the data shows risky patterns like hard braking, speeding, or frequent late-night driving. Whether a program can increase your rate depends on the insurer and your state's rules.
What does the telematics app or device track?
Programs like Progressive Snapshot and State Farm Drive Safe & Save typically track mileage, braking, speed, and the time of day you drive. Exactly which behaviors are scored varies by company. Review each program's disclosure to understand what data is collected and how it affects your rate.
Is usage-based insurance worth it for me?
It often depends on your habits. Low-mileage drivers who brake gently and avoid risky hours may save, while aggressive or high-mileage drivers may not. Discounts and eligibility vary by state and insurer, so compare programs and read the data terms before enrolling.
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