Heard of usage-based insurance? Here’s how it saves you money and creates safer roads
A recent poll showed that only 57% of Canadians have heard of usage-based insurance (UBI) and that 81% of drivers have not yet tried it. But, UBI can actually save good drivers money on their insurance premiums and, since the telematics technology used in UBI tracks driving habits, it can help make our roads safer, explains William Chan, president of Ontario-based BrokerTeam Insurance, a member of the Canadian Broker Network.
“Over the past two years we’ve seen more and more Canadians signing up for UBI to take advantage of the cost-saving benefit and help track their driving behaviour,” Chan says.
“It also made a lot more sense for people when the COVID-19 pandemic hit, as many people were driving less, and some UBI programs are based on a pay-as-you-drive basis,” he adds.
In fact, Chan believes the advantages of telematics data for both drivers and insurance companies will lead to UBI becoming the future of auto insurance.
How does UBI work?
UBI programs conveniently and quickly collect vehicle telematics data from the insurance carrier’s app on your cell phone. The app usually tracks the following driving habits:
- Hard braking
- Kilometres driven
- Time of day
- Phone use while driving
Due to the collection of data and the possible impact on insurance premiums, people have been hesitant to join a UBI program, but Chan says he is noticing a lot less concern from drivers over this, since insurance companies are required by law to take great care in the usage and protection of any personal data they collect.
Why should you get UBI?
“Most drivers with good driving behaviours gain a discount on their insurance premium,” Chan explains.
Mobile-based apps are also a lot more convenient than some of the physical devices previously required to be installed in your car for this type of insurance. Most insurance companies have moved away from this and use apps. The app will help you track your driving habits, like hard braking and distracted driving – which helps drivers be more conscious about how they drive.
On the flip side, recent regulation has also allowed insurance companies to add a penalty for drivers with less-than-ideal driving habits – a further encouragement for good driving behaviour. “Ultimately, the goal is to reduce the number of accidents and make our roads safer,” Chan says.