Best usage-based insurance

The average American driver drives more that 13,000 miles per year. This makes them more susceptible to car accidents and the resulting injuries and damages. Insurers expect this level of risk. However, there are ways to decrease risk for both the insured and the insurer. For the right driver, usage-based car Insurance policies might be appealing.

While usage-based insurance and paid-per-mile insurance may share some similarities, they are very different policy types. Pay-per-mile policies typically require drivers to pay a fixed amount for each mile they drive, on top of a low rate set by the insurance company. Utilization-based policies, on the other hand, take into account multiple factors such as driving habits and mileage. Drivers could get a discount on their premium based upon their driving habits and mileage over the policy’s term.

There are many options for drivers, just like with any auto insurance policy. It may prove difficult to choose the right company for you. Bankrate’s editorial team monitors the insurance market closely to provide drivers with current policy evaluations and aid them in making decisions. Below are some of the most popular usage-based car insurance policies.

What is usage-based car insurance?

Car insurance can be expensive. Drivers want to be rewarded with savings when they are eligible. Drivers can earn substantial premium discounts through usage-based car insurance by allowing their driving habits and other factors to be monitored. This is usually done through telematics devices, or car plug-ins that connect to mobile apps of the providers to store data.

Car insurance offers financial assistance for car accidents and other related incidents. Usage-based insurance can be mutually advantageous for both drivers and insurance companies. Your premiums could be reduced if you have safer driving habits such as not speeding. A usage-based policy offers a possible discount, but it also provides additional incentives to drivers to be safe on the roads and lower claims risk for the insurers. These policies are designed to track the following behaviors:

  • Driving speeds: If you keep your speed limit within the legal limits, it could help an insurer perceive you as a safer driver.
  • Acceleration: You can reduce the risk of an accident by not accelerating too fast.
  • Braking: A hard brake can often signal unsafe driving habits.
  • Driving times: Insurers may keep track of the hours you drive. Certain times of the day might be more dangerous than others.
  • Annual mileage: The less you drive the more likely you will be to cause an accident or file an insurance claim. In order to calculate your total earned discount, insurance companies will likely include driving less than the average national mileage.

While the idea of installing a tracking device in your car may seem nerve-wracking, most insurance companies do not use the data to increase your premiums. Telematics is used primarily to encourage safe driving, and lower the risk of high-risk activities. You can earn double-digit discounts by using a tracking device.

Best usage-based car insurance

Usage-based insurance was first introduced in the 1990s by mainstream auto insurance. There are many options for drivers these days.

Four top car insurance companies were identified in our search for the best use-based car insurance. Three of the top national auto insurance companies that sell traditional policies are offering usage-based programs: Nationwide’s SmartRide, American Family’s KnowYourDrive and Geico’s DriveEasy. Root Insurance is the fourth company. It was created to provide more affordable car Insurance rates through pricing premiums that are based on drivers’ driving habits.

American Family – KnowYourDrive

American Family’s use-based program KnowYourDrive offers drivers the opportunity to learn and save. Sign up immediately to start saving and receive a 10% discount on your premium. KnowYourDrive is more than just a savings site, as its name implies.

The program’s mobile app is easy to use and provides valuable insights that will allow you, and other insured drivers, to make safe driving decisions. The app records both short- and long-distance trips and logs information about where you excel in safe driving practices and areas where you need to improve. Instead of receiving just a score or a final discount, the app gives you tips and tools that will help you become a better driver.

No matter if your policy covers you alone or several members of your family, all drivers listed on your policy can participate in the discount. Although this may make it more difficult to save a certain amount of money since you won’t be able to control all of the behavior, it can help each driver become more aware of how their actions impact the policy. You can continue to get discounts up to 2-20% if you remain enrolled in the program. This is based on the app’s insights. You can also qualify for an American Family Travel Package as a bonus for signing up for KnowYourdrive. This package includes rental reimbursement, accidental death and dismemberment benefits, and more.

Nationwide SmartRide

Nationwide’s SmartRide is known for lowering your rates. Sign up now to receive a 10% instant discount on your Nationwide policy. You could get an additional 40% discount based on your driving test results.

SmartRide can be installed in your car as an app or as a separate device. This makes it accessible to drivers who don’t have smartphones. Drivers who are enrolled in multiple Nationwide usage-based programs may find it useful to have a separate tracking device. SmartRide tracks your mileage and takes into account vehicle usage when calculating your discount. Nighttime driving is particularly important as you have the greatest chance of being in an accident between midnight – 5:00 a.m. Nationwide also notes that they measure traffic time, so you will likely save more if your vehicle avoids congested roads. However, speeding up or not braking hard could result in points being lost.

You will need to follow a program lasting four to six months. Nationwide monitors your driving record and updates you weekly. Your discount will be applied to your policy once you have completed the program. Nationwide also states that the discount will be applied to your policy as long as your policy covers auto insurance and you have the same insured drivers.

Geico – DriveEasy

Geico’s DriveEasy launched in 2019. It was late compared to other similar products. The savings that many participants receive has helped the program gain a loyal following. DriveEasy drivers could see their premiums drop significantly depending on how far they drive and what their driving habits are.

You will need a Geico Auto Insurance policy and a smartphone to sign up for DriveEasy. You will need to download the DriveEasy App and keep it on your device for as long as the program is active. The app tracks activities such as speed, hard brakes and phone use while driving. Geico can also track how much time you spend driving. Your rate may drop if you drive less.

DriveEasy’s family sharing function is a unique feature. This is a useful feature for parents who want to monitor their teen drivers. Families can compare driving reports and compete to get the highest driving score.

Root Insurance

Root Insurance is unique in that it only offers usage-based policies, unlike other car insurance companies which rely on standard underwriting techniques. Root Insurance does not require you to sign up for a standard auto policy in order to see how much you can save. Root claims that customers can cut an average $900 per year by switching. It allows you to download the app and conduct a driving test while your current insurance is still in force. You could get a Root quote after a two to three-week test drive if you reside in one of the 30 covered states. Compare it with your current rate

Root analyzes your vehicle usage as well as the driving habits to determine your rates. These factors include driving time, smooth turning and brakes, and an uninterrupted focus while driving. These factors are not uncommon in usage-based policies but Root considers them to be extremely important. Drivers who score poorly on their test drive may not be eligible for coverage or quotes from the company. Root might be attractive to drivers who are safe and responsible.

Root’s insurance model is based on the idea that fewer drivers are risky, which means that everyone who is accepted pays less overall. Root is focused on safer drivers, so drivers who don’t have Root coverage might feel more comfortable knowing that they won’t be overcharged. They could also use the Root test to assess their driving habits and make adjustments.

Questions frequently asked

What is usage-based insurance?

A type of car insurance that is usage-based uses your smartphone or a mobile telematics device to track and calculate your driving habits. These programs typically consider two factors: how safe you are driving and how many miles you drive. The more safe your driving habits are, the higher your premium could be.

Is it possible to lower your rate by paying per mile for car insurance?

Use-based insurance is more affordable for safe drivers who don’t use their car often. This is not a guarantee. It is best to test drive the tracking device to get a quote. Many insurance companies offer pay per mile insurance policies that are based on how much you drive.

To enroll in the pay-as you-go car insurance, do I need a smartphone?

To participate in their usage-based programs, most insurance companies require that you download an app. This means that your smartphone should be available for use during driving. Nationwide and other insurers offer the option to install a small device inside your car. A smartphone is not necessary in this instance, but it could be a better way to track your progress towards a discount and see your daily habits.