Use Base Car Insurance

In recent years, nine of 10 top U.S. auto insurance companies have started selling policies based on how motorists drive. At least a handful of pay-as-you-drive policies are offered in every state, covering as many as 3 million U.S. vehicles, according to industry estimates. Switching to use-based insurance (UBI) could help you save a little or a lot over what car owners spend on premiums associated with a more traditional policy.Over the past couple years, a majority of the country's largest auto insurance carriers and many smaller ones have begun offering pay-as-you-drive and other forms of use-based insurance or have pilot projects in the works. During the same time, every state insurance regulator in the country has approved at least a handful of the policies, and some many more.Carriers set UBI rates by collecting mileage or other information directly from your car, but similarities among policies end there. Some insurers use a small, meterlike electronic device that plugs into a car's onboard diagnostics port to store or transmit information. Newer versions gather driving data through an app and a smartphone connected to a car's infotainment or telematics system.Auto insurers set rates for use-based insurance (UBI) by monitoring your mileage, driving speed or related activities through electronic devices or smartphones and apps connected to your car's diagnostics port. That's different from traditional policies, whose rates are based on actuarial studies of historical data on demographics and risk factors such as driving records.

Drivers may happily trade access to their driving habits for lower insurance rates. But privacy advocates worry that insurance companies aren't always 100 percent transparent about what data they collect, what they do with it and with whom they share it.Policies are expected to become even more popular in the near future. Within five years, 20 percent of all U.S. vehicle insurance is expected to incorporate some form of UBI, according to a January 2014 report from the National Association of Insurance Commissioners' Center for Insurance Policy and Research UBI hasn't fully arrived, however. While all signs point to more consumers giving the plans a spin, UBI policies still represent a tiny portion of the overall auto insurance market. Policies from Progressive, State Farm, Allstate, Esurance and others cover less than 2 percent of all vehicles on theroad, according to industry watchers.

Understand what types of data insurers collect: Some states restrict the information insurers can collect, which limits the types of UBI policies they offer. In California, for example, insurance companies can track mileage but are barred from monitoring where or when you drive. They also can't track such behaviors as how fast you drive or how often you slam on the brakes, the activity known in insurance lingo as "hard-braking events." Visit state insurance regulators' Web sites for their explanations of the UBI plans they authorize, such as this pay-as-you-go auto insurance pamphlet

Privacy concerns are one of the biggest roadblocks. Drivers have been reluctant to let insurers place devices in their cars to track their mileage, says Michael Barry, a spokesman for the Insurance Information Institute, an industry group. Instances of credit card data breaches and government spy agencies monitoring cell phone communications have only added to people's sensitivities about what might become of their personal data.

Try before you buy: Certain insurers give potential customers a chance to take a UBI policy for a test-drive before committing to a policy. In such cases, you may be asked to plug an electronic monitor into your car's diagnostics port for a month or so, which allows the insurer to collect enough data to set a rate. Other insurers offer UBI policies only to existing customers.

Understand how insurers determine discounts: Insurers may offer an introductory discount of 5 or 10 percent during a try-out period, and adjust the rate as needed after monitoring mileage or driving behaviors for a set time period. Progressive Insurance bases rates for its Snapshot policy on six months of driving data. State Farm customers with Drive Safe & Save policies keep electronic monitors plugged into their cars all the time, so, theoretically, their rates could change at renewal time, if they've driven substantially more or less than in the previous period.Consider a UBI bundle: Some insurers offer UBI as part of a bundle of services tied to a car's built-in entertainment, safety or maintenance systems. State Farm's Drive Safe & Save with In-Drive Connect policy, a joint venture with Verizon Wireless, offers mileage-based insurance along with stolen vehicle assistance and hands-free mobile phone service. After a one-year free trial, charges for In-Drive Connect jump to $6.99 a month or more based on what other features a customer chooses.

See how you're doing: If you sign up, use the Web portal associated with your UBI policy to monitor your driving. Some insurers' dashboards give customers a grade based on their driving habits. For example, customers of Allstate's Drivewise UBI policies can download an iPhone or Android app to look up mileage, speed, hard stops and what times of day they drive."Every person has a different degree of how much privacy they want," says J. Robert Hunter, insurance director for the Consumer Federation of America. "Personally, I would want hard-braking data collected on me because I drive safely. But other people might not. Of course you have to trust [insurers] when they tell you what they're collecting."from the Oregon Department of Consumer and Business Services. You can also read the fine print on UBI policies on insurers' Web sites to determine what driving data an insurer collects, and how it is gathered. Forty-two percent of a representative sample of 1,046 U.S. drivers were "interested" or "very interested" in UBI plans, according to a February 2013 poll from market researcher Strategy Analytics."Privacy is a real question," says J. Robert Hunter, insurance director for the Consumer Federation of America. "What do insurance companies do with that information? If I park at the corner of Main and 14th and on one corner is a bar and another is a gym, will you raise or lower my rate?"