Ontario’s car insurance regulator, the Financial Services Regulatory Authority (FSRA), will permit insurance providers the option to use telematics data to impose a surcharge on motorists with high-risk driving behaviours.
That’s a noteworthy change since motorists who sign up to a usage-based insurance (UBI) program have the opportunity to earn discounts on their premiums for consistently demonstrating safe-driving habits. Now, the pendulum can swing both ways.
How does usage-based insurance save drivers money?
There are two types of UBI programs available in Canada: pay-as-you-go (tracks the number of kilometres a vehicle travels) and pay-how-you-drive (monitors driving behaviour including speed, acceleration, braking, and the distance travelled). Some involve a device plugged into the vehicle; others use an app drivers download to a mobile device.
Not all insurers offer a UBI program. For those who do offer it, the lifting of the surcharge restriction does not affect any existing programs or policies, unless the insurance provider applies to FSRA to make changes. FSRA must approve both newly introduced UBI programs and any changes to existing ones.
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UBI programs collect detailed telematics information about where, how, and when vehicles are driven. The programs are designed to give drivers more control over the price of their auto insurance in three ways:
- Charging less for drivers who demonstrate safe driving habits and driving fewer kilometres.
- Charging more for drivers with risky driving behaviours and high kilometre counts.
- Promoting the benefits of driving safely to participating motorists.
In a press release, Tim Bzowey, Executive Vice-President, Auto/insurance Products at FSRA explained, “We need to be responsive to the evolving needs of drivers and removing regulatory barriers for usage-based insurance is one example.”
FSRA also says it will engage consumers to learn more about their experiences with UBI programs without providing additional details.
Why should you sign up for usage-based insurance?
According to RATESDOTCA’s Insuramap data, the average premium in Ontario in December 2020 was $1,616. Depending on where in the province you live, you may pay more or less for coverage. Therein lies the appeal of UBI programs: no matter where you reside or drive, if you’re a safe driver, you can earn a discount on your premium at renewal. Moreover, most insurers offering UBI will give drivers who sign up a 5% to 10% discount from the get-go.
How else can you reduce your auto premium?
UBI may not appeal to everyone. Nevertheless, there are other ways that you may be able to reduce your insurance bill, including:
- Being ready for winter driving with snow tires, which will get you a 5% discount on your policy.
- Bundling your car and home insurance policies for a discount of 10% to 15%.
- Choosing higher deductibles on your coverages if you can afford to do so.
It’s also worthwhile to learn what your options are for finding an affordable policy that suits your needs by taking a few minutes to compare policies and premiums.