Usually, usage-based insurance premiums are calculated by considering a base cost and adding other fees based on how much, how, when and where someone drives.
A common application of UBI is in Motor insurance, where specialised UBI providers have developed ways to offer temporary insurance cover e.g only for the period when the vehicle is on the road, which can be determined by telematics devices or by the policyholder themselves who could e.g turn the policy on or off for short periods of time from an online app.
The proponents of UBI generally believe they can offer a more affordable product to the end consumers by giving them insurance coverage for only periods when insurance is actually used and needed.
