UBI, short for usage-based insurance, is a type of policy offered by car insurance providers. Drivers may lower their insurance rates if they allow for a small telematics device to be installed in their vehicles. This device will monitor the driving habits and how much a policyholder is driving. For me, the toughest task about using the device is finding out where to plug it in. I went to https://www.carmd.com/obd-port-location/ to find out where the port was for my vehicles. In some instances, all it involves is a download to your smart phone instead of using a device.
Usage-based insurance has several advantages:
Policyholders can get fast discounts.
Insurance companies will install telematics devices for a short period of time (usually 90 days). This period is enough for insurers to determine if a driver can qualify for a good driver discount. You usually get a discount just for signing up. You typically do not get penalized if you are a bad driver
Encourage better driving habits.
Knowing that they are monitored and any bad driving habit is penalized will make the drivers adopt better driving habits. There is typically a penalty for driving late at night, so if you are typically a day time driver the discount can be higher.
Obtain a low-mileage discount.
Insurers consider that drivers that drive fewer miles are less likely to be involved in accidents. And for that reason, insurance companies offer the low-mileage discount.
UBI can help accident investigation.
The telematics devices often record data like speed, acceleration, hard braking, direction, and airbag deployment. This data can sometimes be important for investigators when they try to find out what happened and who is responsible in case of an accident.
Consistent discounts for teen drivers.
Teen drivers automatically pay high insurance premiums. One way to lower their car insurance rates is through UBI. For that is necessary for teen drivers to have good driving habits while the telematics device is installed.