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.
Auto insurers want to align the driving behaviors of an individual with premium rates for auto insurance.
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.
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.
Currently most companies offer UBI rating on a optional basis. Consumers should ask their insurance agent or company about UBI.
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.
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.
UBI programs create incentives for consumers to practice safer driving habits, which may allow them to control their premium costs.
The practice of tracking mileage and behavior information in UBI programs has raised privacy and discrimination concerns.