Usage-based insurance is the idea of adjusting the insurance premium based on how a customer drives. 

That’s a big emphasis on the word ‘how’, as it could refer to the distance travelled, or driving behaviours (eg hard braking). 

The general idea is that customers who drive less and/or are safer drivers should not have to pay as a high a premium as those who are perhaps less prudent behind the wheel (according to the telematics).

COVID BRINGS UBI TO THE FORE

The idea of usage-based insurance has been around for the past decade but only brought to prominence in more recent years, in part, due to the COVID-19 pandemic. 

With consumers leaving their cars at home due to the lockdown, insurers and customers are asking — does the one-size fits-all approach still make sense for car insurance?

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