What is Usage Based Insurance?

Usage-Based Insurance (UBI), as the name suggests, is a form of insurance – predominantly used in the insurance of automobiles – where the premiums levied to the policy holder are calculated based on the amount of use the insured asset (i.e. car) incurs.

UBI is available in a variety of formats, and can also be referred to asPay-As-You-Drive (PAYD), Pay-How-You-Drive (PHYD) and Pay-As-You-G(PAYG). 

UBI policies are calculated in a variety of different ways, but always require the use of an electronic device – either temporarily or permanently – to monitor usage. 

Key Words: UBI, Telematics, Pay-As-You-Drive (PAYD), Pay-How-You-Drive (PHYD), Pay-As-You-Go (PAYG)