What You Need to Know about Usage-based Insurance (UBI)

Usage-based Insurance (UBI) is a car insurance coverage that tracks the policyholders’ driving habits through in-vehicle monitoring systems (IVMS). The tracking devices transmit the insurance company’s real-time driving data, such as speed and distance traveled. Thus, the cost of UBI policies is hinged on the actual risk.

How Do Car Monitoring Devices and Apps Work?

There are two types of insurance-approved IVMS. These include an app that you can download on your phone and a monitoring dongle that you can plug into your vehicle’s OBD-II port. Through this port, the device collects the data generated by the computers and sensors onboard. The OBD-II port is also what emissions testing facilities and mechanics use to detect problems with a vehicle, such as error codes.

Monitoring apps, on the other hand, use sensors to collect data on your driving habits. While an app doesn’t directly collect data from your vehicle through the OBD-II port, it still collects and analyzes important data about your driving habits. For example, it gathers details such as your driving speed and GPS location. After some time, if your auto insurance company finds that you have excellent driving habits, they can reduce your auto insurance rates.

Data Tracked by Insurers

Most insurers typically reveal the kind of data collected, but they don’t provide specifics on using the data. Essentially, they look for information that shows your driving habits, especially habits that may lead to accidents, such as

  • How long and how often do you drive
  • Hard acceleration
  • Hard braking
  • Speed
  • Phone usage as you drive
  • Fast cornering
  • Once this data is conveyed to your insurer, they use mapping information to check speed limits, stop signs, and other traffic controls that are in place in your driving route. Therefore, if you’re a dangerous driver, your insurer will likely know. If you opt for a monitoring dongle, it won’t tell if you are using your phone as you drive. However, it gathers the data generated by your vehicle’s sensors and computer. This includes data generated by advanced safety technology.

    Smartphone apps often also provide feedback on your driving habits so that you can monitor and improve how you drive. If your driving habits aren’t the best, you can improve your driving and potentially get better auto insurance rates.

    Are Monitoring Devices and Apps Worth It?

    Very few drivers are required to install monitoring devices, so it’s primarily up to you to decide whether you need one. However, it would help if you tried usage-based insurance. Monitoring systems can help you improve your driving habits by providing you with feedback as you drive. They’ll make you a better road user, and you may save some money thanks to the safe driver discounts. If you want to opt-out of a usage-based program, all you have to do is contact your insurance provider.

    Let our experts at Singh Agency take the stress out of buying a UBI policy in Great Neck. Give us a call at (516) 605-1010 to talk about your coverage or make an appointment with our office during business hours. We’re located at 55 Northern Blvd Ste 308, Great Neck, NY 11021