Key Features:
- Mileage or Time-Based: The cost is based on either how many miles you drive or the time you spend using your insured asset (e.g., a vehicle).
- Telematics Technology: Insurers typically track your driving habits using telematics devices, GPS, or mobile apps that monitor speed, braking, distance, and even time of day when driving.
- Lower Premiums for Low Usage: If you drive less or during safer times, you can benefit from lower premiums compared to traditional insurance, which assumes a set risk profile.
- Types of Coverage:
- Pay-per-mile: Charges are calculated based on the number of miles driven.
- Pay-as-you-drive (PAYD): The premium reflects the time or frequency of use.
- Pay-how-you-drive (PHYD): Rates are influenced by driving behavior, such as acceleration, braking, and speed
Benefits:
- Cost savings for infrequent drivers.
- Encourages safer driving habits by providing incentives for cautious behavior.
- Transparency and customization in policy pricing
Common Providers
Companies like Metromile, Root Insurance, and Allstate’s Milewise offer pay-as-you-go insurance options in certain regions. Traditional insurers have also started providing UBI programs as a flexible option for customers.
This model is ideal for people who don’t drive often, work from home, or own a second vehicle that isn’t used frequently
