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By Kelly Hernandez

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Agent’s Guide to Usage-Based Insurance and Telematics

April 1, 2025

Highlights:

  • Drivers can influence their auto insurance premium through safer driving habits
  • Many want to know about usage-based insurance and pay-per-mile insurance
  • Some common misconceptions or myths are easily busted

More and more, customers are seeking a personalized approach to their insurance coverage. Specifically, about auto insurance, a policyholder’s driving behaviors and exposures can vary. If a client doesn’t use their vehicle often or has a favorable driving record, they often expect that to be reflected in their premiums. That’s where usage-based insurance (UBI) comes in.

What is usage-based insurance?

UBI policies collect information about a person’s driving habits to provide savings based on how they drive. Some usage-based insurance options are based on how safe you drive (SmartRide®), and others are based on the number of miles you drive (SmartMiles®). UBI continues to gain traction in the market, and recent research found that the number of UBI insurance policies grew by 4 million from 2023-2024.1

SmartRide®: Pay how you drive insurance

Nationwide’s SmartRide® is a UBI program that provides savings for safe drivers. Enrolling in SmartRide® is free and looks at driving behaviors like miles driven, hard braking, acceleration and nighttime driving. Policyholders can enroll in the program and save up to 40%, depending on their driving habits.2 For more information on the program, click here.

SmartMiles®: Pay per mile car insurance

SmartMiles® is a UBI program that may benefit policyholders who drive infrequently. Effectively, SmartMiles® is a pay-per-mile program that provides a flexible monthly rate based on miles driven each month.3 SmartMiles® is great for those who have a short commute, work from home or have an extra car not used for commuting. Click here to learn more.

Benefits of selling usage-based car insurance

There are several benefits of UBI, including:

  • Cost savings and personalized pricing—Offering UBI allows insurers to pass savings on to policyholders based on their actual driving habits. This also leads to personalized pricing, rewarding insureds for safe driving behavior.
  • Safe driving—UBI programs assess driving behaviors to offer savings. As such, policyholders are aware and receive personalized feedback on their driving habits (e.g., hard braking, acceleration, etc.) and, may be more likely to practice safe driving practices to receive insurance discounts.
  • Improved transparency—Through UBI programs, policyholders can gain a greater understanding of how their driving habits affect their insurance costs.

Offering usage-based insurance can strengthen customer retention and help customers save money now. Customers who participated in the SmartRide® program had retention rates over 2 percentage points higher than the Nationwide average.4

How is usage-based insurance data collected?

After the insured enrolls in SmartRide®, data is captured using a mobile phone application, with SmartMiles® small plug-in device is installed in the vehicle or some car models can enable their vehicle’s built-in technology to transmit data for a more seamless customer experience.

How does SmartRide® and SmartMiles® benefit customers?

Safe drivers can save up to 40% in Nationwide’s SmartRide® program and are eligible for a 15% discount upon enrollment in most states2. The SmartMiles® pay per mile insurance program saves lower-mileage drivers on average 33% over a traditional Nationwide auto policy.5

Answers to common usage-based insurance myths

Myth #1: Customers can’t trust an insurance company with this data.

Answer: The data collected by Nationwide is used for insurance purposes and never sold to any third parties. Drivers can easily see their driving data that is gathered through the SmartRide® app or Nationwide’s online web portal. The data collected serves as a way of providing safe driving feedback. Nationwide takes members’ data security very seriously and uses security measures to protect their privacy.

Myth #2: Driving data will be used to increase insurance rates.

Answer: Nationwide’s SmartRide® program is designed to reward customers for safe driving without any financial risk. In most states, SmartRide® participants are eligible for a 15% discount upon enrollment.3 In the unlikely event that a customer doesn’t qualify for savings, their auto policy will revert back to the standard premium without the discount at their next renewal. Alternatively, they can continue participating, follow the driving feedback, and earn a discount at their subsequent renewal if their driving improves.

Myth #3: The process to enroll and activate a UBI telematics program is too complex.

Answer: The enrollment process for these programs is simple and can be processed by agents and activation can be as simple as downloading a mobile app. Plus, the discounts customers earn are automatically applied, ensuring a seamless experience.

Sources

  • 1

    Usage-Based Insurance Accelerates In the United States | IMS

  • 2

    SmartRide availability varies; program criteria differs in California and North Carolina. Stated discounts are approximations. Discounts do not apply to all coverage elements; actual savings, availability, and program criteria vary by state, coverage selections, rating factors and policy changes. Enrollment discount applies until a driving behavior discount can be calculated, which could be zero. Driving behavior discount is applied to a policy when all drivers have activated the SmartRide Mobile app within 30 days of the policy’s effective date and the app remains active for 80 days. All discounts are subject to change based upon actuarial support and driving behavior at subsequent renewals or with changes in drivers or vehicles on the policy. In VA and WA, the discount may decrease at renewal based on changes in driving behavior. In WA, the driving behavior discount is applied at renewal.

  • 3

    SmartMiles variable premium is based upon the Cost Per Mile established for the coverages in force and the number of days and miles driven when the coverage is in force. SmartMiles Safe Driving Behavior Discount could be zero and does not apply to all coverage elements; actual savings vary by state, coverage selections, rating factors and policy changes. Safe Driving Behavior Discount applies at the next policy renewal and remains while the vehicle is enrolled in SmartMiles. Estimated premium is subject to change based upon final rated mileage during the mileage period and policy changes. Safe Driving Behavior Discount not available in California.

  • 4

    Data is based on Nationwide data, March 2023 through February 2024 for customers who complete the SmartRide evaluation period (excluding CA).

  • 5

    Based on national data from March 2023 through April 2024 (excluding CA). Includes average SmartMiles Safe Driving Behavior Discount of 8% (applied after completing an insurance term with SmartMiles). Savings are compared to a Nationwide policy not enrolled in a usage-based insurance program for similar risks.

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