If you're like many of our clients across Canada, your driving habits changed dramatically over 2020. The elimination of long weekday commutes left many cars parked in driveways, sometimes for multiple days in a row. This change in driving habits has raised questions on how to properly insure motorists who aren't using their vehicle daily.
Have you heard of usage-based insurance (UBI)? Many Canadians are opting to sign up and participate in UBI as a means to help lower their insurance costs. UBI, also known as pay-as-you-go or pay-as-your-drive insurance, sets car insurance premiums because of your actual driving behavior. This is a different approach than what has historically taken place with standard criteria and a shift to a more individual rating. UBI can capture the true driving habits of a driver.
Understanding user-based insurance (UBI)
It all starts with the idea that if you're a good driver, you should pay less for insurance. Usage-based car insurance breaks down two ways by monitoring your habits behind the wheel based on:
- how you drive (pay-as-you-drive)
- the distance you drive (pay-as-you-go)
Providers will use either a mobile application or have you plug in a small device in your car to log and capture the data.
How does pay-as-you-drive usage-based car insurance work?
For pay-as-you-drive, a device or your smartphone will measure the distance you drive, the time of day, your acceleration, how you handle turns and how hard you brake. Based on the data, you will be rewarded with applicable discounts - ranging from 10 to 30 per cent, all due to your safe driving habits. This data-driven approach will provide a more accurate insurance cost based on the individual driver and not the traditional car insurance model that applies model rating factors to the risk and historical demographic statistics.
Pay-as-you-go UBI car insurance allows you to buy a small amount of kilometers to use in one term with an option to top those up should you find that you are going to exceed the purchased amount. MyPace from CAA is an app which you can use to monitor your usage and help reward yourself based on low kilometer use - starting with a minimum of 9,000 km per year. There is a small adjustment to the MyPace rate when you add monthly kilometers if you go over the initial amount.
NFP and usage-based car insurance
Whether it's MyPace CAA or another usage-based car insurance policy, our goal is to help you stay behind the wheel on your own terms. Your car insurance needs have changed over the past year, and the solutions available to address those needs are changing. Our relationships with top carriers gives us access to usage-based car insurance technology so we can help clients find the car insurance they need. Contact us today.