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Can you get car insurance in Ontario based on how much you drive? Yes: it's called “pay-as-you-go", or “pay-by-the-kilometre” insurance. It first became available in Ontario 2018. If you don't drive often or only drive short distances, this kind of insurance could potentially save you money on your car insurance premiums.

How Does Pay-as-You-Go Insurance Work?

The model is simple: you prepay a modest base daily premium for pay as you go car insurance. You'll also pay an additional charge based on how much you drive. You'll start with an initial 1,000 km. As you drive, you will be charged for additional distances in 1,000 km increments.

The insurer knows how much you're driving through a device you'll install in your car. The device will track how many kilometres you actually drive. It automatically reports to the insurance company through telematics. You'll get reports and updates through an app on your mobile phone.

At present, “pay-as-you-go” car insurance policies are typically capped at 9,000 km a year. If you exceed this number, you'll be switched to a non-usage-based policy and rates.

Who Could Benefit from Pay-as-You-Go Car Insurance?

Commuters will easily exceed the 9,000 km policy cap, so “pay-as-you-go” is a better fit for drivers who use the vehicle on occasion or daily for short distances. If you use public transit and drive only on weekends, the policy could be a good choice. Older drivers and people who work at home are also potential candidates.

Could Telematics Devices Offer Additional Discounts for Safe Driving?

The device that tracks the distance you drive for “pay as you go” can also track other information like safe driving habits using telematics. Auto telematics are increasingly sophisticated. If you have a newer car, it may transmit information to your car dealer regarding needed service.

Even if you drive more than 9,000 km a year, you may find car insurance that offers a discount for installing a telematics device in your car. The device gives the insurance company information about your safe driving habits. You'll be rewarded with good driver discounts. You could be eligible to pay premiums that are as much as 25% lower than what you're paying now. Since so many variables go into car insurance premiums, your savings will vary.

Combine occasional driving insurance with the savings you might also get from installing a "safe driver" telematics device in your car and you have more options than ever to get the insurance policy that's right for you. Compare car insurance quotes in Ontario to learn your options today.


The RATESDOTCA editorial team are experienced writers focused on sharing stories and bringing you the latest news in insurance and personal finance. Our goal is to provide Canadians with the information and resources they need to make better insurance and financial decisions.

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