Objectives: This study reviews the usage based insurance system for automobiles using RFID cards. Method analysis: Usage based insurance is a system where the premium is estimated based on the usage behavior of the customer. Findings/ application: This method is mainly developed to improve the method of automobile insurance in accordance with the driving behavior of the driver and after considering the main parameters required to drive a vehicle safely. This method is mainly based on usage based insurance (UBI) system which is also popularly known as pay as you drive (PAYD) or pay how you drive (PHYD). People many times feel burdened on the amount of premium one has to pay.