How usage-based insurance works

Big brother is insuring you

Would you let your provider track your driving habits to qualify you for discounts?



To save on car premiums, would you let your insurance provider monitor how safely you drive? Courtesy of Desjardins and its subsidiary The Personal, usage-based insurance (UBI) has arrived in Ontario and Quebec, promising drivers up to 25% off their monthly premiums if they don’t mind having a small wireless device installed in their vehicle. The instrument measures distance travelled, daytime versus nighttime driving, as well as frequency of sudden braking and acceleration to determine if you’re worthy of a lower rate. Employees in the Desjardins pilot project saved 12% on average, which translates to an average annual auto insurance saving of $150 in Ontario. So, any downside? Although insurers don’t keep tabs on where you go, the devices do record a lot of personal driving information—so participants should ask how the data will be used. However, insurers can’t use the data to raise premiums, deny claims or drop customers, say regulatory agencies. With savings opportunities on the table for drivers, it won’t be long before more insurance providers offer UBI across Canada in an effort to gain a competitive edge. In fact, Deloitte Canada technology expert Duncan Stewart says he wouldn’t be surprised if 50% of Canadian vehicles were using UBI by 2018.