How Usage-Based Auto Insurance Works—And Who It’s Really For
Not every driver in Michigan has the same habits behind the wheel, so why should everyone pay the same for car insurance? With usage-based auto insurance (UBI), your driving behavior can directly influence your premiums. For many drivers, this can mean lower monthly rates and greater control over what they pay.
At Tom Gotham Agency – Farm Bureau Insurance, we offer a UBI program called Driveology®, designed to reward safe, responsible drivers. But how does it work—and is it right for you? Here’s everything you need to know.
What Is Usage-Based Auto Insurance?
Usage-based insurance is a type of auto coverage where your premium is partially determined by how (and how much) you drive. Instead of pricing your policy solely on age, location, or vehicle type, UBI programs use real-time data to create a more personalized rate.
The data is gathered in one of two ways:
Plug-in device that connects to your vehicle’s OBD-II port
Mobile app that runs in the background and tracks driving patterns
What Does It Track?
Programs like Driveology typically monitor the following metrics:
Total mileage
Braking habits (hard or sudden stops)
Acceleration (smooth vs. rapid take-offs)
Time of day (daytime vs. nighttime driving)
Speed consistency
Phone usage (when tracked via app)
This data is analyzed to generate a driver score. Safer habits can lead to discounts, while riskier behavior may reduce your potential savings (but doesn’t necessarily increase your base rate).
Who Benefits Most?
UBI isn’t for everyone, but certain drivers are especially well-suited for it:
Low-mileage drivers: If you work from home, are retired, or only drive locally, you may be overpaying based on traditional rating factors.
Safe drivers: Those who naturally drive cautiously can earn significant savings over time.
Students or young adults: UBI can offset the high premiums typically charged to young drivers, especially those with clean driving habits.
Single-car households: If your car isn’t used daily, you could qualify for lower rates than a household with multiple drivers on the road regularly.
Who Should Think Twice?
UBI isn’t always a fit if:
You regularly drive late at night or during rush hour
Your daily commute is long and includes heavy traffic
You tend to accelerate quickly or brake hard often
You’re uncomfortable with having your driving habits tracked
In these cases, a traditional auto policy may be more predictable and cost-effective.
What About Privacy?
One of the most common concerns about usage-based programs is data privacy. With Driveology and similar services, the data collected is used only for insurance-related purposes and is protected under strict privacy guidelines.
If you’re uncomfortable with being tracked long term, some carriers offer trial periods that allow you to participate for a few months before deciding.
The Driveology® Program by Farm Bureau Insurance
Tom Gotham Agency offers access to Farm Bureau’s Driveology program, which gives eligible drivers:
A participation discount just for enrolling
Personalized feedback through a secure portal
Safe driving tips to help improve your score
Potential for ongoing savings, year after year
Enrollment is easy and risk-free. Your rates won’t increase because of poor scores—you simply gain the chance to lower your premium based on your driving performance.
Should You Enroll?
If you:
✅ Drive less than 12,000 miles per year
✅ Avoid phone use while driving
✅ Don’t frequently brake or accelerate hard
✅ Want to better understand and improve your driving habits
…then usage-based auto insurance could be a smart way to lower your costs.
Final Thoughts
UBI gives drivers a chance to take control of what they pay—not based on assumptions, but on real behavior. It won’t be the right solution for everyone, but it offers real savings for those who drive smart and drive less.
To learn more about Driveology or to see if you qualify, contact Tom Gotham Agency in Fenton or Birch Run, or visit TomGothamAgency.com to request a quote.
