Even though you're a safer driver, you may be paying the same premiums as someone with less than stellar driving habits. This is because you drive the same car, are around the same age, and have the same zip code.

But insurance companies ultimately want to know how big of an individual risk you are, and charge you accordingly. Although insurers do take into account factors such as your driving record, monitoring other aspects of your driving behavior is harder.

Some insurers have started to track their customers' driving habits with a telematics device. These gadgets plug into your car to give real-time data. The insurer then sets your premium based in part on this information. This is called usage-based insurance, or UBI.

UBI is growing exponentially. So much so, that by 2023, it's predicted there will be 142 million subscribers around the world. According to the National Association of Insurance Commissioners, 36 percent of car insurance companies are predicted to use UBI by 2020.

Millennials in particular have shown interest in UBI. According to a survey, 88 percent said they're interested in it.

Although some customers have reservations because of privacy concerns, according to Insurance Journal, people are becoming more comfortable sharing this type of information.

These devices allow insurers to track a driver's behavior, monitoring things like:

  • How many miles they drive
  • How often they drive
  • What time of the day or night they're on the road
  • Speeding
  • Hard braking
  • Rapid acceleration

Who is eligible for UBI? Depending on your state and your insurance company, you may be able to enroll in a usage based insurance program. If your company doesn’t offer it, you can shop around to find one that does.

Switching companies, comparing rates, and enrolling in a UBI program has the potential to save you hundreds of dollars on your car insurance premiums each year.

Who Should Try It

Deciding whether or not you want to try a tracking device depends on your driving habits and your company. Of course, if you honestly assess your driving behavior and realize you're not a by-the-books kind of driver, you might want to pass on installing a tracker.

However, UBI could be a great way for people living in the city to save. If you're primarily taking public transportation and only use your car for the occasional errand, you may want to see if your insurer offers UBI.

Senior citizens, who generally drive less since they don't have to commute to work, could also benefit from this type of coverage. Anyone with a spare car they don't use as much, or who usually carpools may want to look into UBI.

People who generally don't speed, hit the brakes too fast, and avoid driving during late hours have the potential to save as well.

Be careful though. Your company may increase your rates if they find out you’re driving too aggressively. Also keep in mind that these devices may track your location, so privacy may be a concern.

How Much You Save

Discounts vary, so you'll want to talk to an agent to find out much you could save. Some companies offer discounts just for enrolling in the program. Insurers have claimed customers can save up to 30 percent off their premium using usage-based insurance.

Insurance Companies Offering Usage-Based Insurance

We've compiled an overview of the different UBI programs insurance companies offer. Be aware though, that most UBI programs have restrictions based on the state. They might not offer UBI in your state, or have different guidelines.

Allstate

Whether you're an Allstate customer or not, you can take part in their rewards program. After installing their DriveWise device, you can earn points based on your driving behavior. It tracks habits such as:

  • Speeding over 80 mph
  • Hard braking
  • Time of day you're driving

Participants can redeem these rewards for discounts on their insurance if they're an Allstate customer. You'll receive 10 percent off for starting in the program, and a 20 percent discount back based on your driving behavior. People who aren't enrolled with Allstate can receive other merchandise and gift cards.

Progressive

Progressive was one of the first companies to start using UBI when they introduced Snapshot to its customers. The Snapshot device collects the following information:

  • How many miles you drive
  • When you drive during the day
  • Hard braking
  • Rate of acceleration

By using the device, customers can receive a discount for safe driving. If, however, you exhibit risky behaviors your rate could increase upon renewal.

Liberty Mutual

When you enroll in Liberty Mutual's UBI program, RightTrack, you'll receive an automatic five percent discount. You can then earn additional discounts, up to 30 percent for good driving habits. Your premium won't increase if you use their UBI program.

The RightTrack device records stats on four different behaviors:

  • Hard braking
  • Rapid acceleration
  • Time of day you drive
  • Miles driven

Esurance

Like other companies, Esurance's DriveSafe telematics device tracks driving behavior. But unlike other insurers, this device is meant for parents or guardians of teenagers. Parents can then teach their children better driving behaviors based on the information they receive.

Since it's meant primarily as a safety awareness tool, it doesn't affect your rates. The DriveSafe app tracks:

  • Speeding
  • Hard braking
  • How many miles driven
  • Time of each trip

The app also:

  • Limits teens cell phone use. They can't access social media, but can see navigation tools. For iPhone users, a reminder bar will appear on a teen's phone telling them not to use their phone when the car is in motion.
  • Lets parents see their teens driving habits in their DriveSafe account

Metromile

In contrast with the insurers listed above, Metromile only offers policies which utilize a UBI device.  Starting with a base rate of $30, Metromile then charges 3.2 cents per mile times the number of miles driven to get your monthly total.

A wireless device, Metromile Pulse, is installed into your car's diagnostic port. It then tracks the number of miles your drive. Other factors such as your speed, time of day you drive, and how fast you brake aren't measured.