Usage-based insurance (UBI), also known as telematics insurance, is changing how Ontario drivers pay for car insurance. Instead of basing your premium primarily on demographic factors, UBI programs let you prove you're a safe driver and potentially earn significant discounts based on your actual driving habits.
What Is Usage-Based Insurance?
Usage-based insurance uses technology to monitor your driving behaviour and calculate your premium based on how you actually drive, rather than just statistical risk factors. The concept is simple: drive safely, pay less.
UBI programs typically track your driving through:
- Mobile App: A smartphone app uses your phone's sensors to measure driving behaviour
- OBD Device: A small device plugged into your vehicle's On-Board Diagnostic (OBD) port
- Built-in Telematics: Some newer vehicles have telematics systems built-in
How Does Telematics Work?
What Gets Measured
UBI programs typically track several aspects of your driving:
- Hard Braking: Sudden, aggressive braking events suggest risky driving or tailgating
- Rapid Acceleration: Aggressive starts from stops can indicate aggressive driving behaviour
- Cornering: Taking turns too fast suggests aggressive or distracted driving
- Speed: Some programs track speed relative to posted limits
- Time of Day: Driving during high-risk hours (late night) may be noted
- Total Distance: How much you drive overall
- Phone Use: Some apps detect phone handling while driving
How Scores Are Calculated
Each trip you take is analyzed and scored. These scores are combined to create an overall driving score, which determines your discount. Higher scores mean safer driving and bigger discounts.
Potential Savings
The savings potential with usage-based insurance can be substantial:
- Typical Range: 5% to 25% discount based on driving habits
- Best Drivers: Some programs offer discounts up to 30% for exceptional driving
- Immediate Savings: Some programs offer an initial enrollment discount just for signing up
Savings Examples
| Base Premium | 10% UBI Discount | 20% UBI Discount | 25% UBI Discount |
|---|---|---|---|
| $2,000 | $200 saved | $400 saved | $500 saved |
| $3,000 | $300 saved | $600 saved | $750 saved |
| $4,000 | $400 saved | $800 saved | $1,000 saved |
Major UBI Programs in Ontario
Several major insurers offer telematics programs in Ontario:
- Desjardins Ajusto: One of the original telematics programs in Canada, using a mobile app
- Intact my Driving Discount: App-based program measuring driving behaviour
- TD MyAdvantage: Mobile app tracking driving habits for personalized rates
- Allstate Drivewise: Uses either an app or device to monitor driving
- CAA MyPace: Pay-per-kilometre program for low-mileage drivers
- Aviva Tempo: App-based program offering driving feedback and discounts
Advantages of Usage-Based Insurance
1. Pay Based on How You Drive
UBI allows safe drivers to prove their habits and pay accordingly, rather than being lumped in with higher-risk demographic groups.
2. No Premium Increases
Most UBI programs in Ontario guarantee that your rate won't increase based on telematics data. You can only earn discounts, not penalties. This is regulated by the Financial Services Regulatory Authority of Ontario (FSRA).
3. Feedback Helps You Improve
Telematics apps provide detailed feedback about your driving, helping you identify and correct risky habits. Many drivers find they become safer drivers after seeing objective data about their behaviour.
4. Potential for Significant Savings
For safe drivers, UBI offers some of the largest available discounts, potentially saving hundreds of dollars per year.
5. Good for Low-Mileage Drivers
If you don't drive much, pay-per-kilometre programs can offer substantial savings compared to traditional insurance.
Privacy Considerations
Many drivers have concerns about being tracked. Here's what you should know:
What Data Is Collected
- Driving behaviour metrics (braking, acceleration, cornering)
- Time and duration of trips
- Distance travelled
- Some programs track location data
How Data Is Used
- Primarily for calculating your driving score and discount
- May be used for crash detection and emergency services
- Subject to privacy laws and insurer privacy policies
Your Rights
- UBI participation is voluntary
- You can opt out at any time (though you'll lose the discount)
- Insurers must disclose how they use your data
- Data is protected under Canadian privacy legislation
Who Benefits Most from UBI?
Usage-based insurance tends to benefit:
- Safe, cautious drivers: If you naturally drive carefully, you can prove it and save
- Young drivers: Those who face high premiums due to age can demonstrate they're actually safe drivers
- Low-mileage drivers: Pay-per-kilometre programs are ideal for those who drive infrequently
- Anyone willing to improve: Even if you have some bad habits, the feedback can help you become safer
Tips for Maximizing Your UBI Discount
- Drive Smoothly: Avoid sudden acceleration and hard braking
- Maintain Safe Following Distance: This naturally reduces hard braking events
- Take Corners Gently: Slow down before turns, not during them
- Avoid Late-Night Driving: If possible, minimize driving during high-risk hours
- Put Your Phone Away: Some programs detect phone use while driving
- Plan Ahead: Leaving earlier reduces the temptation to speed or drive aggressively
- Review Your Trips: Use the app's feedback to identify and correct problem areas
How to Get Started with UBI
- Check with your insurer: See if they offer a telematics program
- Understand the program: Read about how the specific program works and what it tracks
- Download the app or install the device: Follow setup instructions
- Drive normally: The program will begin tracking your trips
- Review your feedback: Check the app regularly to see your scores
- Earn your discount: After the evaluation period, your discount is applied
Is Usage-Based Insurance Right for You?
UBI is worth considering if you:
- Consider yourself a safe, careful driver
- Are comfortable with some degree of driving monitoring
- Want to potentially lower your premium through demonstrated behaviour
- Don't mind using a smartphone app while driving (in passive mode)
It may not be ideal if you:
- Have privacy concerns about location tracking
- Have a driving style that includes frequent hard braking or rapid acceleration
- Drive primarily during late-night hours
Get a Quote with UBI Discounts
Ready to see if usage-based insurance could save you money? Many insurers offer initial discounts just for enrolling, with the potential for greater savings based on your driving.
Get started by getting your free Ontario car insurance quote and ask about telematics programs that could maximize your savings.