Usage-based insurance (UBI) is a recent auto insurance innovation that enables insurers to collect individual-level driving data, provide feedback on driving performance, and offer individually targeted price discounts based on each consumer’s driving behavior. Using individual driving behavior (from sensor data) and other information for UBI adopters, we estimate the relationship from being enrolled and monitored (for up to 26 weeks) in the UBI program and changes in the driving behavior of UBI customers. The key results of our analysis show that after UBI adoption, the UBI users improve the safety of their driving, providing a meaningful benefit for the individual driver, the insurer, and society as a whole. While UBI customers decrease their daily average hard-brake frequency by an average of 21% after six months, their mileage driven does not decrease comparing week 26 to week 1. We also find heterogeneous effects across different demographic groups. For example, younger drivers improve their UBI scores more than older drivers after UBI adoption, and females show more improvement than males. Furthermore, we find evidence that negative feedback and economic incentives correlate with greater improvement in driving behavior. Our results suggest that by sharing private consumer information with the insurer, UBI can benefit consumers who become better drivers, as well as the entire society from improved road safety.