In this report, the Usage-Based Insurance Market has been segmented by Package Type, Technology, Vehicle Type, Vehicle Age, Device Offering, Electric & Hybrid Vehicle and Geography.

Usage-Based Insurance Market, Segmentation by Package Type

The Usage-Based Insurance Market has been segmented by Package Type into Pay-As-You-Drive (PAYD), Pay-How-You-Drive (PHYD) and Manage-How-You-Drive (MHYD).

Pay-As-You-Drive (PAYD)

The Pay-As-You-Drive model is gaining widespread acceptance, contributing to nearly 40% of the overall UBI market. By linking insurance costs to the number of miles driven, this approach encourages reduced vehicle usage, making it ideal for occasional drivers seeking lower premiums.

Pay-How-You-Drive (PHYD)

Accounting for around 35% of the market, the Pay-How-You-Drive package uses telematics to evaluate individual driving behavior. Safer drivers who avoid harsh braking and aggressive acceleration can benefit from significant savings, reinforcing responsible driving habits.

Manage-How-You-Drive (MHYD)

Representing roughly 25% of current adoption, Manage-How-You-Drive combines behavior monitoring with feedback mechanisms. This model helps users improve their on-road performance by offering personalized insights, making it a forward-thinking option for long-term risk management.

Usage-Based Insurance Market, Segmentation by Technology

The Usage-Based Insurance Market has been segmented by Technology into OBD-II, Smartphone, Black Box and Embedded.

OBD-II

The OBD-II segment contributes roughly 30% to the UBI market, utilizing plug-in devices to gather real-time data on vehicle performance and driver behavior. Known for its accuracy and ease of installation, this technology is favored by insurers seeking consistent data inputs.

Smartphone

With an estimated 25% market share, smartphone-based UBI leverages the built-in sensors of mobile devices to assess driver actions such as speed, turns, and distractions. Its affordability and ease of deployment make it attractive for both insurers and tech-savvy consumers.

Black Box

Capturing nearly 28% of the market, the black box approach remains a reliable and well-established method of telematics monitoring. Permanently fitted in vehicles, it provides in-depth insights ideal for assessing higher-risk drivers and structuring targeted insurance plans.

Embedded

The embedded technology segment, contributing around 17%, integrates telematics directly into a vehicle’s system. This method enhances data precision and enables seamless connectivity, particularly aligning with modern vehicle manufacturing trends.

Usage-Based Insurance Market, Segmentation by Vehicle Type

The Usage-Based Insurance Market has been segmented by Vehicle Type into Light-duty Vehicle (LDV) and Heavy-duty Vehicle (HDV).

Light-duty Vehicle (LDV)

Light-duty Vehicles account for approximately 70% of the usage-based insurance market, driven by the widespread use of passenger cars and compact utility vehicles. These vehicles are well-suited for UBI due to frequent usage patterns and the easy integration of telematics solutions for individual drivers.

Heavy-duty Vehicle (HDV)

The Heavy-duty Vehicle segment makes up about 30% of the market, reflecting growing adoption among fleet operators and commercial logistics firms. By using UBI models, HDVs gain from improved route efficiency, driver behavior monitoring, and cost control in high-mileage operations.

Usage-Based Insurance Market, Segmentation by Vehicle Age

The Usage-Based Insurance Market has been segmented by Vehicle Age into New Vehicle and On-Road Vehicle.

New Vehicle

New vehicles are a primary focus within the usage-based insurance market, comprising around 60% of UBI deployments. Their factory-installed telematics and high compatibility with digital insurance platforms enable seamless data collection and personalized premium calculation. This segment benefits significantly from real-time analytics, making it highly attractive for both insurers and tech-savvy consumers.

On-Road Vehicle

On-road vehicles—referring to older, actively used cars—make up approximately 40% of the UBI segment. Although these vehicles may not have built-in telematics, they can still participate in UBI programs through external devices or mobile applications. The appeal of customized premiums and cost-efficiency is contributing to rising participation among on-road vehicle owners.

Usage-Based Insurance Market, Segmentation by Device Offering

The Usage-Based Insurance Market has been segmented by Device Offering into Bring Your Own Device (BYOD) and Company Provided.

Bring Your Own Device (BYOD)

The Bring Your Own Device model is gaining traction in the usage-based insurance landscape, accounting for nearly 55% of the market. This approach allows users to connect personal devices like smartphones or plug-in telematics to share driving behavior data. Its affordability and user autonomy make BYOD a preferred option for tech-savvy and cost-conscious consumers.

Company Provided

Company-provided devices represent about 45% of UBI implementations, primarily due to their high precision and seamless integration. These devices are installed by insurers and ensure consistent, tamper-proof data collection. Despite their higher setup cost, they are favored for offering more reliable insights into driving patterns and risk profiles.

Usage-Based Insurance Market, Segmentation by Electric & Hybrid Vehicle

The Usage-Based Insurance Market has been segmented by Electric & Hybrid Vehicle into Battery Electric Vehicle (BEV), Hybrid Electric Vehicle (HEV) and Plug-in Hybrid Vehicle (PHEV).

Battery Electric Vehicle (BEV)

Battery Electric Vehicles form a major part of the usage-based insurance segment for electric and hybrid vehicles, accounting for close to 45% of this category. Their built-in telematics and connectivity features support seamless tracking of driving behavior and distance, making them highly compatible with UBI models. BEVs are also seen as eco-friendly options, boosting their demand among urban users.

Hybrid Electric Vehicle (HEV)

With a market share of around 35%, Hybrid Electric Vehicles blend electric propulsion with conventional engines, offering balanced efficiency. HEVs are increasingly enrolled in UBI programs thanks to their steady performance and semi-digital systems that enable moderate telematics integration. Their dual nature allows insurers to assess both eco-friendly and performance-related driving metrics.

Plug-in Hybrid Vehicle (PHEV)

Plug-in Hybrid Vehicles account for roughly 20% of the UBI electric and hybrid vehicle segment. These vehicles can switch between electric and fuel-based modes, offering extended range and fuel savings. While their dual operation may pose minor complexities in data consistency, their growing popularity is encouraging insurers to develop customized UBI solutions tailored for PHEVs.

Usage-Based Insurance Market, Segmentation by Geography

In this report, the Usage-Based Insurance Market has been segmented by Geography into five regions; North America, Europe, Asia Pacific, Middle East and Africa and Latin America.

Usage-Based Insurance Market Share (%), by Geographical Region

North America

North America dominates the usage-based insurance landscape with an estimated 40% market share. The region's advanced telematics infrastructure, combined with high levels of vehicle connectivity, supports the widespread rollout of personalized insurance plans. UBI adoption is further driven by tech-savvy consumers and favorable insurance regulations.

Europe

Europe holds close to 30% of the global UBI market, fueled by an emphasis on sustainability and connected mobility. Strict emission standards and the push for smart transportation have made usage-based policies an appealing choice for insurers and policyholders alike. The region is also witnessing innovation in eco-driving reward systems.

Asia Pacific

Asia Pacific contributes about 20% to the UBI market, with strong growth prospects due to increasing urbanization and digital adoption. Countries such as China and India are witnessing a rise in connected vehicles, helping insurers implement dynamic, behavior-based pricing models more effectively.

Middle East and Africa

Middle East and Africa, accounting for nearly 5%, are in the emerging phase of usage-based insurance adoption. The shift toward digital platforms in the insurance sector and rising awareness of driving behavior metrics are expected to boost growth over the next few years, particularly in metropolitan hubs.

Latin America

Latin America represents around 5% of the total UBI market. While the region faces infrastructure limitations, growing smartphone usage and demand for low-cost insurance solutions are encouraging insurers to adopt usage-based models. This is particularly evident in countries like Brazil and Mexico.

This report provides an in depth analysis of various factors that impact the dynamics of Usage-Based Insurance Market. These factors include; Market Drivers, Restraints and Opportunities Analysis.

Drivers, Restraints and Opportunity Analysis

Drivers

• Growing demand for personalized insurance policies
• Expansion of telematics and connected vehicle technologies
• Rising need for cost-effective premium models

• Increasing adoption of data-driven insurance platforms - The increasing adoption of data-driven insurance platforms is reshaping the traditional insurance landscape. Insurers now leverage advanced analytics and real-time telematics data to create customized premiums based on individual driving behavior. This shift enables insurers to better assess risk and improve claim predictions. As the volume of connected vehicles grows, so does the ability to collect diverse and granular data, enhancing underwriting precision.

  Consumers are increasingly attracted to dynamic insurance models that reflect their driving habits. This transparency builds greater trust and engagement between insurers and policyholders. Additionally, usage-based insurance models promote safer driving practices, as drivers become more aware of their habits due to constant monitoring. This behavioral feedback loop not only reduces accidents but also lowers claim frequency and operational costs for insurers.

  Emerging technologies such as artificial intelligence (AI) and machine learning algorithms further enhance the predictive capabilities of data-driven platforms. These tools support real-time adjustments in pricing, fraud detection, and customer segmentation. Moreover, partnerships between insurers and mobility platforms or OEMs enable seamless data integration across devices and ecosystems, ensuring better service delivery.

  With the continued rollout of 5G connectivity and increasing consumer interest in personalized insurance solutions, the data-driven model is expected to dominate the future of UBI. The ability to provide competitive premiums, improve risk modeling, and increase customer retention highlights the significance of this driver in propelling market growth.

Restraints

• Data privacy and cybersecurity concerns persist
• Lack of standardized telematics infrastructure
• User resistance to constant driving monitoring

• Regulatory challenges in global UBI adoption - Despite its potential, the UBI market faces challenges due to regulatory complexities in global adoption. Different regions have varying legal frameworks and data privacy regulations, making it difficult to implement a standardized UBI model. For multinational insurers, adapting products and services across diverse markets increases both compliance costs and operational burdens.

  The uncertainty surrounding data ownership and usage rights also raises significant barriers. Many consumers remain skeptical about how their driving data is collected, stored, and potentially shared. Without clear, universal standards for data governance, consumer adoption may be hindered due to privacy-related apprehensions. This is especially pronounced in regions with stringent data protection laws such as GDPR.

  Technological disparities across vehicles and infrastructure further complicate seamless UBI implementation. Not all vehicles are equipped with telematics hardware or compatible software systems, leading to inconsistent data collection. This lack of uniformity affects the accuracy of usage-based scoring models and undermines the fairness of premium calculations.

  To regulatory and technical issues, some insurance providers exhibit institutional inertia and reluctance to deviate from traditional models. This resistance delays innovation and slows down the scalability of UBI offerings. Overcoming this restraint will require strategic alignment between technology providers, insurers, and policymakers to develop robust, cross-border solutions.

Opportunities

• Emergence of pay-how-you-drive models
• Integration with EV and mobility platforms
• AI and analytics for risk assessment

• Growth in insurance demand from fleet operators - The rise of fleet-based services and commercial mobility platforms presents a major growth opportunity for the UBI market. Operators of ride-hailing, delivery, and rental services seek insurance models that reflect actual vehicle usage, driving conditions, and driver behavior. Usage-based insurance offers flexible, scalable solutions that reduce insurance costs while improving risk management.

  UBI adoption among fleet operators can lead to enhanced operational efficiency by incentivizing drivers to maintain safe habits, reducing accident rates, and minimizing vehicle downtime. This data can also be used for driver training programs and performance benchmarking. Fleet managers benefit from access to centralized dashboards and real-time analytics, streamlining decision-making and compliance reporting.

  As urbanization accelerates and smart mobility ecosystems expand, insurers can develop tailored offerings for shared, electric, and autonomous fleets. The proliferation of connected vehicle infrastructure further enables real-time monitoring and policy customization. These trends align perfectly with the UBI model, unlocking new revenue streams across evolving mobility segments.

  The integration of IoT-enabled fleet management systems with insurance platforms can create highly granular usage datasets. This facilitates accurate pricing, fraud detection, and proactive claim resolution. As fleets play a pivotal role in last-mile delivery and logistics, their shift toward usage-based insurance signifies a critical transformation point for market expansion.