The auto insurance industry landscape is changing as more companies embrace emerging technology. No longer are auto insurance rates based solely on your age, marital status, where you live, or the number of violations that you have. Instead, some companies are also basing their rating structures on how you drive, when you drive, and even where you drive. These models are often called Usage Based Insurance (UBI) or Pay-Per-Mile Insurance (PPMI) programs. And the adoption rates of these new rating variables varies across insurance companies. Some base their rates almost entirely on these new metrics whereas others have been slower to shift from traditional rating structures. Details regarding the type of data collected and the methods of data collection for these new programs are below:

 Type of Data Collected:

 Most insurance companies collect a wide range of data for their UBI programs. Some of the most common of these variables include the following:

• Hard Brakes/Hard Acceleration: Hard braking or fast accelerations are signs of aggressive driving which data suggests increases the likelihood of being involved in an accident. Maintaining assured clear distance with the cars ahead of you and accelerating smoothly are ways to ensure this variable doesn’t increase your premium.
• When You’re Driving Data suggests that between midnight and 4am are the riskiest times to be on the road. So, if possible, avoid late night driving when participating in a UBI program.
• How Much You’re Driving, The more you’re on the road, the higher the chances that you’ll be involved in an accident. Those with low annual miles tend to get the most favorable rates from UBI programs.

 Data Collection Methods

 You might be wondering how insurance companies even get access to your driving behavior data. There are two primary data collection methods:

• Proprietary Apps - Some insurance companies have created their own proprietary app which customers download to their phones for purposes of recording driving behavior. The app uses the technology embedded in the phone to collect hard brakes, GPS, date/time, etc and then wirelessly sends that data to the insurance company.
• Plug-In Devices -  Every car manufactured since 1996 has an On-Board Diagnostics (OBD) port which allows for real-time monitoring of the vehicle. Some insurance companies have created a device that a customer can plug into this port. The device then collects the vehicle information and wirelessly sends that data to the company.

The best way to determine whether a UBI program is best for you is to ask a licensed agent in our office. We can assist you with assessing your insurance needs and provide you with some quotes from several of the top insurance companies.

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