With the pandemic keeping us mainly functioning at home, commuting to work and driving in general has decreased for many Canadians. This change in our driving habits has resulted in many people looking for alternative options to insure their vehicles.
Which is why we want to talk about usage-based insurance, or UBI - an insurance option that can help Canadians decrease costs with the possibility to pay-as-you-go or pay-as-you-drive.
Pay-as you-drive vs. Pay-as you-go
When considering UBI as an option as a driver, it's good to know the differences and options available to decide what is best for you.
Pay-as-you-drive is when a device is plugged into your car, or a mobile application on your smartphone, is used to measure the distance you drive, the time of day, your acceleration, how you handle turns and how hard you brake. Based on this data, your policy 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 number of kilometers to use in one 12-month term. The minimum amount of kilometers to start is 9,000 a year with an option to top those up should you find that you are going to exceed the minimum purchased amount. MyPace from CAA is a mobile app which you can use to monitor your usage.
Usage Based Insurance Options
Here's a breakdown of various UBI options available to drivers.
Pay-As-You-Drive (PAYD)
This type of UBI measures the distance you drive. A device is plugged into your car or a mobile app on your smartphone tracks your mileage. Your insurance premium is based on the number of kilometers you drive. The less you drive, the lower your premium.
Pay-How-You-Drive (PHYD)
This option uses telematics to monitor your driving habits, such as speed, acceleration, braking, and cornering. Safe driving behaviors can earn you discounts on your insurance premium. The data is collected through a device installed in your car or a mobile app.
Pay-As-You-Go (PAYG)
With PAYG, you purchase a set number of kilometers to use within a 12-month term. If you exceed the purchased amount, you can top up your kilometers. This option is ideal for drivers who don't drive frequently.
MyPace by CAA
MyPace is a mobile app offered by CAA that allows you to monitor your usage and pay for insurance based on the number of kilometers you drive. It provides flexibility and can help you save on insurance costs if you drive less.
Telematics-Based Discounts
Many insurance companies offer telematics-based discounts for safe driving. These programs use onboard tracking technology or mobile apps to monitor driving habits and provide discounts based on safe driving behaviors.
Hybrid UBI Programs
Some insurers offer hybrid UBI programs that combine elements of PAYD and PHYD. These programs track both the distance you drive and your driving habits to determine your premium.
Insurance Providers Offering UBI
Several insurers in Canada offer UBI options, including Allstate, Belair Direct, CAA Insurance, Desjardins, Intact, Onlia, Pembridge, TD Insurance, and Travelers. These insurers provide various UBI programs that can help you save on your insurance premium based on your driving behavior and mileage.
By choosing a UBI option that suits your driving habits, you can potentially lower your insurance costs and enjoy a more personalized insurance experience.
NFP’s insurance specialists are here to help you obtain the coverage you need at a reasonable price, with deductible levels you’re comfortable with. Request an online quote today!