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How much can good drivers save with usage-based auto insurance?

Dec. 27, 2022
3 mins
A couple and their dog stop by a river on a road trip

This article has been updated from a previous version.

People gain experience with time, and when it comes to driving, the more hours logged behind the wheel, the better it can be for your car insurance premium. Those with lengthy driving histories and immaculate driving records can see sizeable savings.

Many car insurance companies offer “safe driver discounts,” as drivers spend more time on the road or hit significant life milestones.

Every insurance provider is different, but generally, drivers can see their premiums start to drop three to five years after they get their driver’s licence. It applies to both young and old drivers, depending on the amount of experience they have. However, there are a few stipulations. Drivers are typically required to be accident-free, violation-free, and claims-free to see a reduction.

Nevertheless, you can potentially lower your auto insurance premium by enrolling in a usage-based insurance (UBI) program with your insurance provider in addition to comparing auto insurance rates annually.

What is usage-based insurance?

Usage-based insurance (UBI), which relies on telematics technology, tracks how fast you are driving, accelerating, braking, and cornering, the length of your trips, and what times you are typically on the road. Some UBI programs can even track if you are distracted while driving.

The programs are usually accessible through a mobile app but can also be hardwired into your vehicle. Each insurance provider will have a different name for its respective UBI program; however, they all typically work the same way — rewarding good drivers for their safe driving habits, and in some provinces, penalizing them for unsafe driving.

How much money can I save with usage-based auto insurance?

Usually, the UBI app will give drivers a rating or score at the end of the data collection period, resulting in an insurance discount of up to 30% upon renewal. However, some insurance providers will offer a small discount just for signing up. For instance, drivers may get a 10% discount immediately after enrolling in their insurance provider’s UBI program. In this case, the additional discount would be contingent on the driver’s score.

That means experienced drivers and less experienced ones may be able to save based on how they drive rather than solely how long they have been driving.

Formerly, the information insurance providers gathered from UBI apps could not be used against drivers. In November 2020, however, Ontario changed the rule to discourage high-risk driving. Now, those who exhibit risky driving behaviour may face a surcharge on their insurance premium because they pose a greater risk on the roads.

UBI is great, but it may not be for everyone. Talk to your insurance provider or check out reviews online to see how people liked their experience with the technology. Enrolling in a UBI program may help you save money on your annual auto insurance premium.

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Hayley Osmond

Hayley Osmond is an editor and writer in the personal finance space, where she uses her eight years of media and marketing experience to bring content to life. She specializes in money products, including mortgages, home and auto insurance, and credit cards. Hayley holds a Broadcast Journalism diploma from Sheridan College and was awarded the Shaw Media Journalism and Media Award for graduating at the top of her class. Her work has appeared in Global News and diverse digital corporate training materials behind the scenes.

Hayley is passionate about making complex subjects, such as home buying and financial literacy, concise and intriguing. Her work has garnered media coverage from The Globe and Mail, blogTO, Yahoo! News, and CityNews 680 and has been syndicated across other publications.

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