What if your car insurance rate was based on how well and how often you actually drive — not just your age, ZIP code, or credit score? That’s exactly what usage-based insurance (UBI) promises.
If you’re a safe driver, someone who works from home, or just don’t put many miles on your vehicle, usage-based car insurance could be your ticket to major savings in 2025 and beyond.
What Is Usage-Based Insurance?
Usage-based insurance (UBI) is a type of car insurance where your premium is based on real-world driving behavior. Insurers track your habits — either via a mobile app or a plug-in device — and reward you with lower rates if you’re a safe, low-mileage driver.
It’s often referred to as:
- Telematics insurance
- Pay-as-you-drive (PAYD)
- Pay-how-you-drive (PHYD)
How Does It Work?
Once you enroll in a UBI program, your insurance company will track data such as:
- Total miles driven
- Time of day (late-night driving is riskier)
- Braking and acceleration patterns
- Phone usage while driving
- Average speed and cornering
The better you perform — and the less you drive — the more you could save.
Who Should Consider Usage-Based Insurance?
UBI can be a great option if you:
- Drive fewer than 8,000–10,000 miles a year
- Work from home or commute short distances
- Are a new or young driver looking to earn discounts
- Want to prove your safe driving habits for better rates
- Live in an urban area but don’t drive daily
How Much Can You Save?
Savings vary by provider and how well you drive, but typical discounts range from 10% to 40% off your base premium. Some insurers even offer an initial sign-up discount just for trying the program.
Pros and Cons of Usage-Based Insurance
✅ Pros:
- Can reward low-mileage and safe drivers with big savings
- Great for students, retirees, remote workers
- Often includes feedback to help improve driving habits
⚠️ Cons:
- Your premium may increase if you drive aggressively
- Some may feel uncomfortable with tracking technology
- Not all programs are available in every state
Top Companies Offering Usage-Based Insurance
- Progressive Snapshot®
- Allstate Drivewise®
- State Farm Drive Safe & Save™
- GEICO DriveEasy®
- Nationwide SmartRide®
How to Get Started
- Request a quote from a provider that offers UBI
- Enroll and download the tracking app or install the device
- Drive as you normally would — but safer!
- Review your performance through the app
- Get rewarded at renewal (or monthly, in some cases)
🚗 Ready to Save with Usage-Based Insurance?
Get a personalized quote from top insurers that reward safe, low-mileage driving. Compare usage-based insurance options in your area and start saving today!
Final Thoughts
Usage-based insurance is one of the smartest ways to save money — especially if you don’t drive often or have great driving habits. With more companies offering UBI programs and consumers demanding fairer pricing, it’s no surprise this model is becoming the future of auto insurance.
Drive less? Drive better? Pay less. It’s that simple.