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Usage Based Insurance

Usage based insurance also known as “pay as you drive” or telematics insurance is becoming increasingly common in the automobile insurance industry. Both customers and insurance companies like how insurance premiums can be tailored to the individual. No more blaming other drivers for your rates with usage based insurance – it’s all about how safely you drive.

What is usage based insurance?

Usage based insurance is when an insurance premium or discount is calculated by attaching a box or using an app that measures how and when you drive. This equipment uses GPS and an accelerometer to measure how much you drive what time of day you drive how often you rapidly accelerate and how often you have to rapidly brake. This information is then used to calculate your “risk” as a driver accounting for factors such as driving during rush hour (when you’re statistically more likely to have an accident). Many companies such as Intact and Pembridge are simply offering customers a chance to earn a discount with this technology; your premium will not be raised from what it is currently.

What does telematics insurance track?

Telematics insurance uses a device or app to track your driving behaviours. This includes:

  • Number of kilometres driven
  • When you drive (time of day)
  • Speed
  • Acceleration
  • Braking
  • Cornering

This allows insurance providers to charge drivers exactly as they should be based on the risk level of their driving. If you’re a safe, law-abiding driver this is a great way to avoid being charged to compensate for other drivers in your demographic or geographic location.

Telematics is used extensively in commercial vehicles to track company vehicles and drivers. This technology has been available to regular drivers in Canada since 2013.

How does telematics work?

Your insurance company provides the device or an app that measures your driving habits. Based on the data collected, your insurance provider adjusts your car insurance premiums annually or even monthly. As of March 2019, this information cannot be used to raise your rates only lower them.

Some insurers allow you to track your driving habits on the app or online.

The data collected is not used for any other purpose without your explicit consent nor is it shared.

Why choose usage based insurance?

Usage based insurance allows for a more personalized premium. It rewards safe driving habits and can save you money if you’re a good driver even if you happen to be in a higher risk category (such as those first few years after you get your license).

Another benefit is you get a first hand look at your driving habits. Most insurance companies give you a platform online or via an app so that you can view your record. This allows you to improve your driving habits based on feedback from the usage based insurance technology getting you more discounts and lower premiums.  It’s also great to measure driving habits of your newly licensed teen.

Is usage based insurance for me?

Companies like Pembridge Aviva and Intact are now offering this type of insurance coverage in Canada. Talk to your broker about a usage based or telematic program. They’ll be able to advise you on which is best for you.