UBI

Usage-Based Insurance

A type of insurance model where premiums are determined based on an individual’s actual usage, behavior, or risk factors rather than traditional static variables like age, gender, or location. In UBI, real-time data is collected from various sources, such as telematics devices installed in vehicles, smartphone apps, or wearables, to assess the customer’s behavior and risk profile.

For example, in auto insurance, UBI leverages telematics to track metrics like driving speed, braking patterns, mileage, and time of day. Safer drivers or those who drive less can potentially pay lower premiums based on their driving behavior, making insurance more personalized and fair.

UBI is increasingly popular in auto, health, and property insurance, where behavioral data can more accurately predict risk and help insurers offer customized, cost-effective policies.

• Abbreviation: UBI