Auto insurance rates have climbed so much that enough Americans could be willing to sacrifice some privacy for lower rates to make 2025 a breakout year for usage-based insurance, or UBI, according to data analytics firm JD Power.

UBI rates are based on real-time tracking of consumers’ driving habits, unlike traditional insurance premiums that are based on past driving records. UBI uses telematics technology, often on a mobile phone, to track customer driving patterns and offer discounts based on safe driving and fewer miles driven.

Tesla owners who buy insurance from the electric vehicle giant already have UBI policies because that’s all Tesla offers, but JD Power senior director Stephen Crewdson said UBI is spreading to more car owners, generally.

“Premiums have increased 30-40% (on average) over the last three years, so consumers are looking to save on auto insurance,” Crewdson said.

How much can UBI save customers?

Customers typically can save about 10% compared with their traditional auto insurance policy, Crewdson said.

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“Some people pay thousands of dollars a year with multiple people insured,” he said. “So that could add up to hundreds of dollars in savings.”

What does UBI track?

Driving habits UBI may track, according to the National Association of Insurance Commissioners, include:

• miles driven
• time of day
• where the vehicle is driven
• rapid acceleration
• hard braking
• hard cornering
• cell phone usage
• airbag deployment

How many people are switching to UBI?

In 2020, 16% of auto insurance shoppers were offered UBI and 12% of them enrolled, Crewdson said. In 2024, 15% of buyers were offered UBI, but a higher percentage (19%) of them signed up.

While insurance companies offer UBI less than they did in 2020, a higher percentage of people enrolling shows that interest is “consumer driven,” Crewdson said.

Though consumers are likely being driven to UBI for the savings, the increase in interest is also a sign more people feel comfortable sharing their data. “People are being tracked anyway with their phones or an app, so they might figure why not get a savings from it,” he said.

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Should you consider UBI?

If you are a good driver, drive fewer miles than average and are comfortable sharing data, then UBI may be a good fit.

UBI can also help people become better drivers, Crewdson said. “In a 2024 study, 65% told us they’re getting driving recommendations and 44% of them actually are changing driving behavior. So becoming a safer driver is a side benefit.”

On average, new UBI customers satisfaction is 64 points higher (on a 1,000-point scale) than new customers who choose not to participate in UBI programs, JD Power said.

“The bump in customer satisfaction that’s coming from UBI, combined with a surge in rate-driven shopping and switching activity and continued interest among insurers in courting new customers have set the stage for a significant jump in UBI adoption,” the analytics firm said in a report.

Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at [email protected] and  subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.