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Best usage-based insurance
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Car insurance companies calculate premiums based on perceived risk. Technology advances are making it easier for companies to track risk-related driving metrics like miles traveled, speeding, driving time and cell phone use. Drivers with safe and conscientious driving habits may save significantly with usage-based insurance. Bankrate has identified five of the best options for companies with usage-based insurance (UBI) plans.
How does usage-based car insurance work?
Usage-based car insurance may provide an option for drivers to earn significant premium discounts by allowing their driving habits to be tracked. Typically, this is accomplished through apps or telematics car plug-ins, which connect with providers’ mobile applications to store the data.
Usage-based car insurance could be mutually beneficial for both insurance companies and drivers. The more you exhibit safe driving habits, the more you might save on your premiums. Opting for a usage-based policy not only provides a potential discount but also adds additional incentives for drivers to practice road safety and reduce claims risk for insurers. Behaviors that most insurers track in UBI programs include:
- Driving speeds: Most telematics programs check that drivers are obeying posted speed limits.
- Acceleration: Avoiding risky habits, such as accelerating too quickly, might reduce your risk of an accident and make you a safer driver.
- Braking: Insurers may see frequent hard braking as an indication of unsafe driving habits.
- Driving times: Some insurers may track the hours in which you typically drive, as certain times of day may provide less risky road conditions than others.
- Annual mileage: In general, the less you drive, the less likely you are to get into an accident or make an insurance claim. Because of this, insurers are likely to include driving less than the national average mileage in their evaluation of your total earned discount.
Although the idea of having your driving habits tracked may be nerve-wracking, looking through the metrics individual telematics programs track and comparing these with your personal driving habits may help you understand how enrollment might affect your insurance premiums. Some drivers may find that telematics programs encourage them to reduce high-risk driving activity.
Is usage-based insurance the same as pay-per-mile?
Although usage-based insurance and pay-per-mile insurance may have similarities, the policy types are quite different. With pay-per-mile policies, drivers typically pay a set amount per mile that they drive on top of a base rate set by the insurer. Comparatively, usage-based policies typically still use a traditional insurance policy structure, with a potential discount based on assessed driving habits. While both pay-per-mile and UBI programs may financially reward drivers with low mileage, telematics programs measure a broader scope of driving metrics.
The best usage-based car insurance
In our search for the best usage-based car insurance, we identified five top auto insurance companies offering great UBI programs. Four are usage-based programs from national auto insurers that primarily sell traditional policies: Progressive Snapshot, Nationwide’s SmartRide, Geico’s DriveEasy, and Allstate’s DriveWise. The fifth is Root Insurance, a company created to offer more affordable car insurance rates by pricing premiums based on drivers’ habits behind the wheel.
|UBI Program||Best for…||Impact on rates||Potential savings||Availability|
|Progressive Snapshot||Near-nationwide availability||Rates may increase or decrease||Average savings of $47 at sign up and $156/year||Available in all states except CA. Sign up discount is not available in HI or NY|
|Nationwide SmartRide||Telematics without the risk of a rate increase||Rates may only decrease||Up to 40%||Available in all states except AK, CA, HI, LA, NY|
|Geico DriveEasy||Automatic sign up discount||Rates may increase or decrease based on state policies||Up to 25%||Available in 33 states and Washington, DC|
|Allstate Drivewise||Redeemable points-based savings||Rates may increase or decrease, except in NY||Up to 40%||All states except NY|
|Root Insurance||Drivers who know they like UBI programs||Rates based on driving habits during a test drive period||Average of $900/year compared to a traditional auto insurance policy||Available in 34 states|
Progressive Snapshot, available for free to Progressive customers, uses telematics data from either your smartphone or a company-supplied device that’s kept in your vehicle. Based on driving behaviors and information gathered, you may see your insurance rate either increase or decrease. Though not available in all markets, the company’s Snapshot Road Test program may help drivers evaluate whether they would save money by switching to Progressive Snapshot.
Learn more: Progressive Snapshot review
Unlike many other telematics programs, your rates only have the potential to decrease with SmartRide. Most drivers see their discount kick in within 80 days. As a plus, Nationwide states that your discounted rate will continue as long as you maintain your auto insurance policy and the same insured drivers. SmartRide pays particular attention to nighttime driving habits since you have the highest chance of getting in an accident between midnight and 5:00 a.m. The company also notes that they also measure time spent in traffic, so you are likely to save more if you avoid congested roadways.
Learn more: Nationwide SmartRide review
Launched in 2019, Geico’s DriveEasy was a late arrival compared to similar products from competitors. To sign up for DriveEasy, you will need a Geico auto insurance policy and a smartphone. Participation requires downloading the DriveEasy app and keeping it installed on your mobile device as long as you are enrolled in the program. The app can detect when you are driving versus when you are a passenger and logs activities like speed, hard braking and hands-on phone use while behind the wheel. One unique aspect of DriveEasy is its family sharing function. Family members can review each other’s driving report cards and compete for the best driving score.
Learn more: Geico DriveEasy
The Drivewise program rewards safe driving habits by allowing participants to earn points redeemable for a variety of perks, like gift cards and travel. Drivewise is somewhat unique in that you do not have to have an active Allstate car insurance policy to participate and potentially earn points. For drivers already insured through Allstate, a policy discount may also be available for participating in the program. For those who feel they would benefit from instant feedback, the Drivewise app offers real-time insights for drivers looking to improve their habits.
Learn more: Allstate Drivewise review
Root Insurance is unique in the UBI market in that it exclusively provides usage-based policies. To determine rates, Root examines your driving habits during a trial period and extends quotes only to drivers who meet their safe driving criteria. The company claims that this process allows it to keep rates low for all customers by only insuring safe drivers. Because of this stipulation, Root may be especially appealing to those who commonly exhibit safe driving habits. Root’s innovative model earned it our 2023 Bankrate Award for Best Digital Auto Insurance Company.
Learn more: Root Insurance review
Is usage-based insurance right for me?
If you are a driver who practices consistently safe habits, you may save by switching to usage-based insurance or enrolling in a telematics program. If you are willing to adapt your habits to align with the behaviors your insurance company rewards, you may also consider enrolling in a usage-based program.
Drivers who are more aggressive on the road, who live in higher-risk areas, or who regularly drive in heavy traffic may see less of a benefit, and potentially even a rate hike, with UBI. Additionally, not all carriers offer UBI programs in all states. Speaking with a licensed insurance agent may help you identify whether UBI could be right for you.