Get the 411 on Usage-Based Insurance

Would you take advantage of a program that gives you cheaper car insurance based on how safe of a driver you are? Many car insurance companies are now giving their customers more control over their auto insurance with usage-based insurance programs, where customers can 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?

To put it simply, 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 company, since it’s an incentive for you to adopt safer driving practices. Also, in general, people that drive less and have safe driving habits get in fewer accidents, resulting in fewer claims. Overall, your company wants to reward you for your good driving behavior!

How Does the Insurance Company Track My Driving Habits?

When you sign up for a UBI program, your insurance company will typically give you a device — and depending on the company, it may be referred to as a telematics device, car insurance monitoring device, or car insurance tracker, among other names. This device is then plugged in to your vehicle’s on-board diagnostics port (OBD-II port). You’ll sync this adapter with the affiliated smartphone app, which will collect your driving data and send it back to your insurance company. Learn more about car insurance trackers here.

Factors like speed, vehicle usage, braking, acceleration, time of day, and other driving behaviors are monitored, and depending on how you score, you can get a discount on your auto insurance premium.

Don’t worry — you won’t be penalized for having not so great driving habits. A user-based insurance program is designed to benefit you, which is why you’re in control. The safer you drive, the better discount you’ll receive. And, since you can assess your driving habits through your smartphone app, it’s easy to note the areas you could improve upon — and hopefully receive a higher discount.

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.

What Is American Family Insurance’s User-Based Insurance Program?

If you’re an American Family Insurance customer or looking to become one, we offer a user-based insurance program called KnowYourDrive. With our program, you can get a discount of up to 20% on your auto premium! We’ll give you a 5% discount on your premium just for signing up, and we make the setup a simple, quick process.

Take control of your auto insurance and connect with an American Family Insurance agent to see how a user-based insurance program can make you a safer, smarter driver — and not to mention save you money!


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Related Topics: Insurance Terms