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Understanding Insurance

Usage-Based Insurance & How It Works

Would you take advantage of a program that gives you less expensive car insurance based on how safe of a driver you are? Many car insurance companies are now offering their customers more control over their auto insurance with usage-based insurance (UBI). These programs give customers the opportunity to earn discounts on their premiums based on their safe driving habits. But what exactly is usage-based insurance and how can it benefit you? Let’s take a closer look.

What Is Usage-Based Insurance?

Usage-based auto insurance means “pay how you drive.” It’s a way for auto insurance companies to set your premium based on how safe your driving habits are.

Why would an auto insurance company want to do this? Well, usage-based insurance benefits both you and the insurance carrier. It’s incentive for you to adopt safer driving practices and that translates into a more reliable, better customer for your insurance group.

Also, in general, people that drive less and have safe driving habits tend to get into fewer accidents, resulting in fewer claims. The goal of usage-based coverage is to reward you for your good driving behavior with a reduced rate!

How Does the Insurance Company Monitor My Driving Habits?

When you sign up for a UBI program, your insurance company may give you a telematics device to connect to a smartphone app. The device is then placed in your vehicle where it collects your driving data and allows the app to send driving details back to your insurance company. Learn more about car insurance trackers and how they can help you save on your car insurance.

Recent advances in smartphone technology have allowed some insurance companies like American Family Insurance to only require an app for UBI programs. Through GPS and other location-tracking features, the car insurance monitoring app will record your driving habits while you’re on the road — without the need to plug anything into your car.

Factors like speed, vehicle usage, braking, acceleration, time of day, and other driving behaviors are monitored with your telematics device and/or app. After a period of observation, you may qualify for a discount on your auto insurance premium — depending on how safely you drive.

Do usage-based insurance programs save you money?

Usage-based insurance programs are designed to help you drive more safely and they can really lower car insurance premiums, based on your safe driving habits. After all, you’re in control. The safer you drive, the better the discount.

And since you can review your driving habits through the app, it’s easy to see where you need to improve — and hopefully that results in a bigger higher discount. Here’s more good news: you won’t be penalized if driving habits aren’t great just yet. You may not qualify to get that discount, though.

Also, UBI programs are completely voluntary, so you’re never required to take part in the program and you can opt out at any time.

Do usage-based insurance programs monitor my location?

Usage-based auto insurance programs monitor your location while you drive via GPS. This data will be used to help lower your insurance costs if you follow safe driving habits. Rest assured that with American Family your data is safe and will not be shared or sold.

What Is American Family Insurance’s Usage-Based Insurance Program Called?

If you’re an American Family Insurance customer or looking to become one, we offer a usage-based insurance program called KnowYourDrive. With our program, you can get a discount of up to 20% on your auto premium!* And right off the bat, we’ll give you a 10% discount on your premium just for signing up.

How to get started with KnowYourDrive

Installation is simple. All you need to do is enroll in KnowYourDrive with an agent and download the KnowYourDrive app. No separate device required. Your smartphone with the driving behavior app installed will monitor the way you operate your vehicle. The safer you drive, the more money you’ll save on your auto premium.

What are the benefits of usage based auto insurance with KnowYourDrive?

Besides saving up to 20% on your premium, KnowYourDrive can help you:

  • Become a smarter, safer driver by being more aware of driving habits like your speed, braking, cell phone use and traveling at night
  • Experience better fuel economy by potentially traveling longer before refueling — simply by adjusting your acceleration and stopping behavior
  • Track your distracted driving behaviors like texting while driving and challenging you to earn approval checkmarks when you drive distraction-free

Take control of your auto insurance and connect with an American Family Insurance agent to see how KnowYourDrive can make you a safer, smarter driver — and even save you money!

*Program discounts will vary based on driving behavior. The KnowYourDrive discount applies only to the following variable coverages, which are typical for most auto policies: bodily injury liability, property damage liability, collision and comprehensive, medical expense, underinsured and uninsured and personal injury protection. Additionally, the discount does not apply to fixed fees that are part of your policy.

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Related Topics: Insurance Terms