Not Just for Fleet Management
UBI vendors nearly all get their information from devices that plug into a car’s OnBoard Diagnostic (OBD-II) port that usually is found under the dashboard. Cars built after 1996 use this plug-in to access computer and memory functions, and your emissions testing facility may in fact use this to determine if your cars is polluting. They ask the car, the car says yes, and you don’t have to wait for rough-looking strangers to stick diagnostic devices into your tailpipe while their confederates stomp on you gas pedal.
What kind of information are vendors gathering? According to one insurer, factors that get reported back to the insurer include what time of day you drive, how many miles you go, how fast you are going, and how hard you stomp on the brakes. Other systems might use GPS, accelerometer, WiFi, or other clues to figure out where you are, what kind of sketchy neighborhoods you visit, and why you tell everyone you have "mad skillz" when you can’t even outrace a primer-gray Honda Civic with a cheap rear spoiler on the mean streets at midnight.
Some of the top vendors for UBI include Progressive, who is the 800 pound gorilla in the arena, and apparently holds all the good patents, to Allstate, Liberty Mutual, GMAC, the auto club, GMAC insurance, Driveway Software, and Metromile. Some insurers will record a ton of metrics and telemetry and send it back to servers known only to the Legion of Doom, while others just record mileage because that’s all they charge for. The idea of pay-as-you-drive actually goes back a long way but was hard to enforce, since it was so easy to disconnect your odometer. Some states, like Hawaii, actually proposed burying insurance costs in the price of gas, or buying insurance on an ad hoc basis, like a bus ticket. At some point, it could be very possible that you pay for an electronic key that only lets you drive when the car is insured.
Mileage Based Policies
Mileage based insurance is expected to become a much bigger component of the industry, and promises to reward good drivers for their safe habits. It might also turn everyone on the road into a bunch of sheeple who can’t exceed the speed limit in any lane, because they are afraid they will pay more, and this of course means that everyone else has to drive slow too. The feedback given through smartphone apps and emails means that there will be more topics of conversation around the dinner table when someone has to explain how they managed to blow out the annual discount when they were late for work one day. At the opposite side of the spectrum, all the bad drivers out there are going to be unhappy because their rates will go up, and no discounts will be provided, and even though insurers promise not to raise rates based on bad driving, they don't exactly have to renew your policy if they see that you drive like you are listening to Sammy Hagar while you are being chased by a Terminator.