Usage-Based Insurance & How It Works

Would you take advantage of a program that gives you less expensive car insurance based on how safe 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 you the opportunity to earn discounts on your premiums based on your safe driving habits. But what exactly is usage-based insurance, and how can it benefit you? Watch this short video, then keep reading for a closer look at usage-based insurance.

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 an incentive that may help you adopt safer driving practices, translating into a more reliable, better customer for your insurance group.

Also, in general, people who 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 place in your vehicle. The device connects to a smartphone app. 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 records 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 safer and they can 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 because 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 discount.

Also, UBI programs are completely voluntary. You’re not required to participate 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. These 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 are the benefits of usage-based auto insurance?

The opportunity to save on car insurance isn’t the only benefit of participating in a pay-how-you-drive auto insurance program. It can also 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

 

American Family’s Usage-Based Insurance Programs

We offer two usage-based insurance programs to help you take control of what you pay for auto insurance.

Pay How You Drive

If you’re a good driver, take control of what you pay for auto insurance by enrolling in our safe driving program. You can save up to 10% just for enrolling, then have the opportunity to save even more based on your safe driving behaviors. Most customers actively enrolled in the program may save between 5% - 20%!*

Pay as You Drive

If you are a low-mileage driver, we offer a mileage-based program that empowers you to earn savings based on how many miles you drive. When you drive fewer miles, you may earn greater savings — up to 25% savings each month — which means your premium is based on your actual mileage.**

Ready to take control of what you pay for auto insurance? It’s easy! If you’re an existing American Family Insurance customer, simply call your agent to enroll.

Need an agent? We can help you find one near you.

The information on this webpage represents only a brief description of coverages, is not part of your policy, and is not a promise or guarantee of coverage. If there is any conflict between this information and your policy, the provisions of the policy will prevail. Insurance policy terms and conditions may apply. Coverage features and limits vary by state and may be subject to change. Some products are not available in every state. Discount availability and eligibility vary by state and policy terms. (Discounts apply to auto and property policies.) Please check with your agent and read the policy for exact details on coverages and exclusions.

*Rate will vary based on driving behavior. Unsafe driving behaviors may increase your rate. Product eligibility will vary by state, vehicle type, policy form and company underwriting the auto policy. Some restrictions may apply. The rate factor does not apply to fixed fees that are part of the policy. Adding or removing drivers from a policy may impact the overall score and discount.

**Savings apply 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 savings do not apply to fixed fees that are part of your policy. Savings are applied to the vehicle-specific premium, not a customer’s overall premium.