A new kind of car insurance discount – Telematics or Usage-Based Insurance

What Is Usage-Based or Telematics Insurance?
Telematics or UBI is a system that monitors your driving habits. Originally, it was a physical device that you plugged into your vehicle, but now many insurers offer it as a smartphone app. This convenient tool tracks your driving behavior, such as braking, acceleration, distance travelled, speed, distracted driving, and time of day. It calculates a score based on all your drives, so one bad trip won’t negatively affect you. You can even indicate whether you were the driver or passenger.

How much can you expect to save with Telematics?
Telematics insurance can offer significant savings on car insurance premiums, with discounts of 10-30% available for good driving behaviour. However, the discount amount and duration vary by insurance carrier. While telematics tracking won’t increase your premium for bad driving behaviour, a decrease in your discount could result in a higher monthly fee. For example, if your premium is $2000 per year and you receive a 10% discount on enrollment, your premium would be $1800 per year, or $150 per month. But if your discount decreases to 5% after 1 year of tracking, your monthly fee would increase to $158.33. It’s important to keep in mind that while your premium may remain the same, your discount can change and affect your monthly fee.

Is the Data Collected by UBI or Telematics Safe?
Telematics or UBI apps collect driving data to calculate good-driving discounts and insurance companies promise that the collected data will only be used for this purpose. The data will not affect your base premium and it will not be used outside of the app. Additionally, in Canada, data collection and privacy are well-regulated to provide extra peace of mind.

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