Usage-based insurance (UBI)
Also known as: UBI · Telematics insurance · Pay as you drive · Pay how you drive · Pay-per-mile insurance
Auto insurance priced on how the vehicle is actually driven — miles, time of day, braking, speed — measured by telematics, instead of only on the profile at the time of purchase.
At Zarv
A fleet segmented into 3 per-driver risk bands: total premium up to 22% lower, with the same coverage.
The NAIC defines usage-based insurance as auto insurance that tracks mileage and driving behavior. The data comes from a plug-in device, the car's built-in connectivity or a phone app, and can include miles driven, time of day, location, hard braking, rapid acceleration and hard cornering. The simplest form charges per mile (*pay as you drive*); the fuller form prices the way the car is driven (*pay how you drive*).
What regulators allow varies by state, because rating is state law. California, for example, fixes by statute the order of importance of auto rating factors — driving record first, annual miles second, years of experience third — so verified mileage fits squarely, while other factors need the commissioner's approval.
For fleets, the same logic works per driver. Instead of one premium for the whole fleet, each driver is assessed and the fleet is split into risk bands. In Brazilian fleets that did this with Zarv, the total premium fell by up to 22% without reducing coverage — and the insurer keeps a continuous signal it can use at renewal or mid-term.
Frequently asked questions
What data does usage-based insurance collect?
Depending on the program and device, miles driven, time of day, where the vehicle is driven, rapid acceleration, hard braking, hard cornering and air bag deployment. How much is collected depends on the technology and on what the policyholder agrees to share.
Is usage-based insurance worth it?
It usually is for people who drive few miles, avoid high-risk hours and drive smoothly, because the price comes to reflect that. For high-mileage or late-night drivers, a traditional policy can come out cheaper. Read the program terms to see whether the data can only earn a discount or can also raise the price.