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Usage-based insurance (UBI) is a technology-driven auto policy that determines premiums based on actual driving behavior through telematics devices. It offers drivers a smart way to save money on car insurance.
Safeco leads the usage-based auto insurance market with rates as low as $26 monthly, demonstrating one of the top ways customers have saved money on car insurance.
Learn about different UBI programs, from mileage-based to behavior-focused options, and how safe driving practices can earn you discounts of up to 40%. Enter your ZIP code into our free comparison tool to find cheap usage-based insurance in your area.
What You Should Know
- UBI programs offer up to 40% discounts for safe, low-mileage drivers
- Safeco leads with the lowest usage-based insurance rates at $26 monthly
- UBI programs track speed, braking, and acceleration through mobile apps or plug-ins
Usage-Based Insurance Rates Compared
When comparing the best usage-based insurance companies, the average premiums are much cheaper than standard car insurance. The Safeco RightTrack program provides the lowest premiums at $26 per month. Check out the table below for a UBI rate comparison:
| Insurance Company | Monthly Rates |
|---|---|
 |
$61 |
 |
$44 |
 |
$45 |
 |
$55 |
 |
$29 |
 |
$43 |
 |
$38 |
 |
$26 |
 |
$50 |
 |
$37 |
Meanwhile, Allstate has the highest monthly rate at $61, which may reflect broader coverage or different risk assessments. Drivers should compare these options to find the best fit for their budget and driving patterns.
Read More: Allstate Drivewise Review
Usage-Based Insurance: How It Works & Benefits
What kind of car insurance do you really need? UBI emerges as an attractive option for those seeking personalized premiums that reflect their actual driving behavior. It offers the same coverage as traditional policies, including liability, collision, and comprehensive protection.
The difference is that UBI premiums adjust based on driving habits like speed, braking, and mileage. Compare the three types of usage-based insurance:
- Pay-As-You-Drive (PAYD): Bases rates on mileage
- Pay-How-You-Drive (PHYD): Considers driving behavior
- Manage-How-You-Drive (MHYD): Provides personalized feedback for safer driving
One of the hacks to save money on your car insurance rates involves selecting an insurer with favorable UBI discounts. The table below highlights popular usage-based insurance programs, their potential savings, and tracking methods to help drivers lower their premiums.
| Insurance Company | Program Name | Discount Percentage | Tracking Method |
|---|---|---|---|
|
Drivewise® | 40% | Mobile app |
|
KnowYourDrive® | 20% | Mobile app |
|
DriveEasy | Varies by state | Mobile app |
|
RightTrack® | 30% | Mobile app or plug-in device |
|
RealDrive® | 40% | Mobile app |
|
SmartRide® | 40% | Mobile app or plug-in device |
|
Snapshot® | 30% | Mobile app or plug-in device |
|
RightTrack® | 30% | Mobile app or plug-in device |
|
Drive Safe & Save™ | 30% | Mobile app |
|
IntelliDrive® | 30% | Mobile app |
Leading usage-based insurance examples, like Progressive Snapshot, demonstrate how this technology improves your driving habits by monitoring speed, braking, and acceleration patterns, while it also enables faster vehicle tracking through GPS functionality for enhanced security and theft recovery.
Choosing the right usage-based insurance program can lead to significant savings. While Allstate's monthly rates are expensive, its Drivewise program offers one of the highest discounts at 40%, making it a strong option for cost-conscious drivers.
Geico usage-based insurance through DriveEasy provides variable savings based on state regulations, while State Farm usage-based insurance with Drive Safe & Save™ offers up to 30% off premiums. By selecting an insurer with the best discount program and maintaining good driving habits, policyholders can maximize their savings.
Usage-Based Insurance: Pros and Cons
The advantages of usage-based insurance include potential savings for defensive or low-mileage drivers, incentive-based feedback for safer driving habits, and dynamic coverage for occasional drivers. UBI also encourages green benefits in the form of reduced unnecessary driving and emissions.
The GEICO DriveEasy app is nominated for a #Webby, and we need your vote!
— GEICO (@GEICO) April 20, 2021
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There are, however, some disadvantages of usage-based insurance. Possible data breaches and privacy concerns are introduced by continuous monitoring of driving data. Driving behavior governs costs, and you could be charged more for hard braking or driving at night.
UBI also has limited availability, as not all states or insurers offer it, and device malfunctions could lead to inaccurate rate adjustments. To find the best usage-based car insurance, drivers should compare programs based on discounts, technology, and policy terms.
Read More: Best Car Insurance Companies That Don't Monitor Your Driving
Choosing the Right Usage-Based Insurance Company
A practical guide for understanding car insurance points out that usage-based insurance has tremendous potential for savings, with Safeco being the most affordable at $26 a month.
There are several essential factors to consider before signing up for usage-based insurance, including your comfort with data tracking, driving patterns, and program availability in your state.
It's crucial to understand the rules of each program, as savings can vary wildly. Whether you choose PAYD, PHYD, or MHYD programs, success with usage-based car insurance ultimately depends on maintaining consistent, safe driving habits while balancing privacy considerations with potential savings.
Ready to shop around for the best car insurance company? Enter your ZIP code and see which one offers the coverage you need.
Frequently Asked Questions
What is usage-based insurance billing?
A technology-driven insurance model that determines premiums based on actual driving behavior tracked through telematics devices or mobile apps.
Which is the earliest form of usage-based insurance?
Pay-As-You-Drive (PAYD) was the earliest form of UBI, which primarily focused on mileage-based pricing for auto insurance coverage.
Do I need a smartphone to enroll in usage-based insurance?
While many programs use mobile apps, some insurers offer plug-in devices as alternatives. However, most modern UBI programs prefer smartphone tracking for convenience.
How much can I save with usage-based insurance?
Savings vary by provider, with discounts ranging up to 40% for safe drivers and base rates starting as low as $26 monthly with Safeco.
What driving behaviors do UBI programs track?
Programs monitor speed, braking patterns, acceleration, mileage, and sometimes time of day driving through telematics devices or mobile apps.
Read More: Risky Driving Behaviors & the Car Insurance Age Tax
Is my driving data secure with UBI programs?
While insurers implement security measures, there are privacy concerns regarding continuous data tracking and potential data breaches.
What are the different types of UBI programs?
There are three main types or UBI: Pay-As-You-Drive (PAYD), Pay-How-You-Drive (PHYD), and Manage-How-You-Drive (MHYD). Find out which type is available near you by entering your ZIP code into our free comparison tool.
Can UBI increase my insurance rates?
Yes, aggressive driving habits or unsafe behaviors could result in higher usage-based insurance rates. Use a car insurance calculator to get an estimate of your UBI costs.
Is usage-based insurance available everywhere?
No, UBI has limited availability and isn't offered in all states or by all insurance providers.
Which insurance company offers the highest UBI discount?
Several providers, including Allstate's Drivewise®, Liberty Mutual's RealDrive®, and Nationwide's SmartRide®, offer up to 40% discounts for safe drivers.
Read More: Best Low-Mileage Car Insurance Companies