Usage-based Insurance

What is usage-based insurance (UBI)?

Usage-based insurance (UBI) is a type of automobile insurance whereby the premiums are dependent upon factors such as the type of vehicle, time of use, distance driven, place and various behaviors such as sharp turns or hard braking.

Why are insurers using UBI programs?

Auto insurers want to align the driving behaviors of an individual with premium rates for auto insurance.

How does UBI work?

UBI rating varies by company, but normally an insured’s driving behavior is captured via a telecommunication device (either a cell phone, or a device that plugs into a vehicle’s diagnostic port). This device monitors a driver's driving habits, tracking things such as sudden driving maneuvers (hard breaking, fast acceleration, etc). It may also track where, when and how long a vehicle is driven. The insurance company then assesses the data and charges insurance premiums accordingly.

Won’t this telecommunication device mess with my vehicle’s computer?

It is possible that a telecommunication device can interfere with your vehicle’s computer. If that happens it is important to stop using the device and see your local auto mechanic.

Do I have to use UBI?

Currently most companies offer UBI rating on a optional  basis. Consumers should ask their insurance agent or company about UBI.

Will UBI raise my rates?

Consumers should ask for information directly from the company on how UBI will impact premiums. UBI could be used to discount or add to the premium depending on how the company requests to use it in North Dakota.  

What companies offer a UBI program?

Several companies in North Dakota currently offer UBI programs. Consumers should ask insurance agents or contact companies directly for more information. Visit the National Association of Insurance Commissioners (NAIC) State Based Systems (SBS) Lookup to search for companies selling auto insurance in North Dakota.

Besides pricing, what are the advantages of UBI programs?

UBI programs create incentives for consumers to practice safer driving habits, which may allow them to control their premium costs.

Besides pricing, what are the disadvantages to UBI programs?

The practice of tracking mileage and behavior information in UBI programs has raised privacy and discrimination concerns.