The Loans Canada team sits down with Gary Schwartz of the Canadian Lenders Association to talk about open banking.
Usage-Based Insurance In Canada
Loans Canada: The Country's Best Loan Comparison Platform
There’s no getting around a car insurance policy if you want to legally operate a vehicle on Canadian roadways. And those car insurance premiums can definitely put a dent in your budget.
Luckily, there are a few ways to save money on your car insurance premiums, and usage-based insurance (UBI) may be one of them. With this type of auto insurance, your premiums are calculated based on the type of driver you are and how far you take your car when out on the road.
Let’s take a closer look at usage-based insurance to help you decide if this is something that can potentially help you keep your premiums low.
What Is Usage-Based Insurance (UBI)?
Usage-based insurance offers a way for drivers to save money on their car insurance policies. Your premiums will be based on your driving habits (pay-as-you-drive) or how far you drive (pay-as-you-go). That way, if you don’t put many kilometres on your vehicle or are a safe driver, you may be rewarded with savings on insurance premiums.
This type of insurance uses a specialized technology called ‘telematics’ that involves a computer chip inserted into the computer system of your vehicle. This will keep tabs on your driving and will help determine your premiums. Some insurance providers are also using an app integrated with smartphone technology to measure drivers and the distance they drive.
Looking for even more savings? Consider bundling your home and auto insurance.
Two Types Of Usage-Based Insurance
We briefly touched upon “pay-as-you-go” and “pay-as-you-drive,” but what exactly are they?
- Pay-as-you-go. This insurance keeps tabs on how far you drive. So, the more kilometres you put on your car, the higher your insurance premiums will be, and vice versa.
- Pay-as-you-drive. This insurance tracks your driving behaviour, such as how fast you’re going, where you’re driving, and how smoothly you speed up or slow down. The better your driving habits, the lower your premiums will be.
Both of these insurance types require the use of telematics on an integrated app on your smart device to track your driving habits or distance driven.
Benefits Of Usage-Based Insurance
Usage-based insurance may be worth considering for a variety of reasons, including the following:
- Save with good driving behaviour. You will be rewarded with lower insurance premiums if you keep your mileage to a minimum and maintain good driving habits.
- Easy to set up. Many insurers simply require an app to be downloaded on your smartphone. This technology will then be used to track your driving behaviour.
- You’re in control of your rates. Since your insurance premiums are based on how you drive and the distance you travel, you are in control of how much you pay for car insurance.
Drawbacks Of Usage-Based Insurance
While you can potentially save money with usage-based insurance, there are some drawbacks to consider:
- Lack of privacy. It’s possible that the data collected from this technology may be given to third-parties or used to deny claims. While insurance companies claim that they protect all information collected, you may still want to verify that your consent is required before they share your data with any third-party.
- It can backfire on you. If you lend out your car once in a while to another driver, your premiums may be affected if they drive recklessly.
Is UBI available in all provinces?
How much money can I save with usage-based insurance?
Can insurers use the collected driving data to increase my insurance?
Is my usage-based insurance data used the same way by all insurers?
Do all car insurance companies offer usage-based insurance?
- The Co-operators
If you’re a safe driver who doesn’t put much mileage on your car, then a usage-based insurance policy may be something worth considering. This technology is becoming increasingly popular and may be a more affordable option than a traditional car insurance policy for certain types of drivers. Just make sure you take the time to do some comparison shopping among different insurers to find the best price possible.
Rating of 5/5 based on 1 vote.
Largest Lender Network In Canada
Save time and money with Loans Canada. Research and compare lenders before you apply. Share your experiences with Canada's top lenders.
goPeer — Helping Consumers Achieve Financial Freedom by Connecting Canadians Looking For Financing With Canadians Looking to Invest
goPeer is Canada's first consumer peer to peer lending platform and connects creditworthy Canadians looking for a loan with everyday Canadians looking...