What is Usage Based Insurance and How Will it Help Me Save?
One of the most popular ways to save money on car insurance is with UBI or Usage Based Insurance. This type of insurance is also known as Pay As You Drive (PAYD) or Pay How You Drive (PHYD) insurance. So, what is UBI anyway and how does it benefit policyholders?
What is UBI?
This specific type of insurance is based primarily on your individual driving habits. This is different from traditional insurance because traditional policies reward safe driving over time with lower premiums and better rates. This means that lower rates could take years to come into effect, while a UBI policy uses real-time data and patterns of behaviour to provide the most up-to-date policy and lowest rates available.
How is Coverage Determined?
There are several models for UBI coverage that take into account different aspects of your driving style. The simplest model calculates the cost of insurance based on how much you drive, where you drive and when you drive. But other deciding factors include speeding and historic road risks. UBI coverage is also sometimes called telematic coverage because it involves placing a GPS module in the car that reports data back to the insurance company in real-time. Smartphones are also often used to facilitate this type of coverage as technology gets more advanced.
What are the Benefits?
If UBI coverage sounds like something out of a science fiction novel to you, you aren’t alone. This type of coverage is gaining popularity with policyholders for its numerous benefits and innovative technology. Some of the biggest advantages to opting for a UBI policy include:
Provides significant savings for safe drivers.
Encourages others to drive more responsibly and limit unnecessary trips.
The GPS technology in the UBI module can also be used for navigation or emergency services.
It provides consumers with more options for their car insurance coverage resulting in better policies and even more savings.
Since higher risk drivers will be forced to pay more for their insurance, it will cause them to change their risky driving habits, making the roads safer for everyone.
The GPS technology could also be used for safety and security purposes such as tracking in case of theft.
As great as this coverage sounds for saving money, making the roads safer and providing unique security and safety features, there are a few drawbacks that should be considered before opting for a UBI policy:
Some customers cite the constant use of GPS tracking reduces their privacy since personal information such as where and when you drive is being tracked.
This pricing structure also may make it more difficult for consumers to shop around and get lower rates from other providers, which can be seen as a negative for some.
In general, the benefits of UBI coverage far outweigh the potential drawbacks when you consider the personalized savings, safer roads and added security features that come with a UBI policy.
For more information on UBI coverage and how to save on your insurance premiums, call DMW Insurance today at (416) 787-1668