What is usage-based insurance and is it right for you? 

What is usage-based insurance and is it right for you? 

Usage-based insurance (UBI), also known as pay-as-you-drive insurance, has recently spiked in popularity amongst Canadian drivers who find themselves driving less since the arrival of COVID-19. More drivers are looking for a way to be rewarded for their good driving habits. Wondering if usage-based car insurance is right for you? We’ve put together a guide to help break down the FAQs of UBI programs. 
 
What is usage-based insurance? 
A usage-based insurance program offers drivers more control over their car insurance rates. Rather than relying on traditional factors and statistics, such as age and driving history, to calculate your car insurance premium, UBI programs primarily rely on telematics to understand how often you drive and how safely you drive. 
 
To participate in a UBI program, you must install a wireless telematics device in your car or download a UBI app on your smartphone (depending on the program). The device or app then provides your insurance provider with information on your driving behaviours. Your insurance rates are then calculated accordingly — rewarding good driving behaviours and less time on the road with discounts and cost savings on your premium.
 
Common driving safety behaviours considered in a UBI program are: 

  • How often and how far you drive

  • What time of day you drive

  • Speed in relation to posted limits

  • Braking and acceleration

  • Other important driving metrics

 
What discounts are available with usage-based insurance? 
Depending on which usage-based insurance program you choose how much time you spend on the road and how safely you drive, you could save between five to 70 per cent on your car insurance premium. 
 
Some examples of UBI programs and their discounts currently available in Ontario include:
 
Intact my Drive
Intact my Drive offers drivers up to a 30 per cent discount on their car insurance based on their driving habits and overall “safety score”. Drivers will receive a one-time 10 per cent discount when they enroll in the program. Their discount is then recalculated every six months based on their “safety score” factors — including distracted driving, rapid acceleration, hard braking, speeding and risky driving hours. 
 
CAA Connect
CAA Connect offers drivers up to a 15 per cent discount on their premium after one year. To maximize their discount, drivers enrolled in this program should drive less than 12,000 km per year, avoid speeding and avoid driving between the risky hours of 12:00 am to 4:00 am. 
 
CAA My Pace
CAA My Pace offers drivers between a five to 75 per cent discount on their car insurance depending on how many kilometers they drive. Low-mileage drivers who drive up to 1,000 km per year are eligible to save up to 75 per cent, while drivers who drive up to 8,000 km per year are eligible to save up to five per cent.
 
How is the data collected used by my insurance provider?
The data collected by the wireless telematics device or the UBI smartphone app is used by your insurer to determine what discounts and cost savings you may be eligible for based on your overall driving behaviour. All data is stored in a secure server and is protected under Canada’s Personal Information Protection and Electronic Documents Act. The data collected by your insurer may be shared with third parties when required by law — such as in the case of a collision. 
 
To better understand what data, you are sharing with your insurance provider, how it will be stored and how it will be used, review your policy’s terms and conditions, or speak with your insurance broker.
 
If you have questions about your current car insurance coverage and/or eligibility for a usage-based insurance program, contact us at 1-888-494-0090. If you would like to get a quote for car insurance, contact an OTIP broker today at 1-888-892-4935.