Usage-based insurance is a type of auto insurance that tracks mileage and driving behaviors. Usage-based insurance is often powered by in-vehicle Telematics technology that can be installed after-market using a plug in-device or installed in new vehicles by car manufactures. Solutions can also work via mobile applications, in which case they track a specific individual rather than the vehicle. In either can, the driver's behavior is consistently monitored, allowing insurers to more closely align actual driving behaviors with premium rates. Telematics devices measure a number of variables of interest to underwriters, including miles driven, the time of day, the location of vehicle operations, air bag deployment, and instances of rapid acceleration, hard braking, hard cornering, or other high risk driving behaviors. The level of data collected reflects the type of Telematics technology employed and the policyholders' willingness to share personal data. Insurance companies are able to more precisely list insurance premium to risk profiles by assessing regular driving behavior, rather than only looking at accident history. For example, a driver who drives long distances at a high speed and who takes sharp corners will be charged a higher rate than a driver who drives short distances at slower speeds. Premiums can collected using a variety of innovative fintech methods, including utilizing gas station pumps, debit accounts, direct billing and smart card systems.
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