Insurance companies traditionally lump together drivers by age, gender, and location, using statistical data and averages to determine car insurance premiums. One of car insurance’s biggest complaints is that premiums are not based on individual performance. As a result, higher-risk groups, like new or young drivers (check out our advice for young drivers), tend to pay very high premiums. Now, with Telematics Insurance or Usage-Based Insurance (UBI), your premium can reflect your own driving habits.
If you want to pay lower rates on your Ontario car insurance premiums, Telematics Car Insurance may be just what you want.
What is Telematics Insurance? How Does it Work?
Telematics, or Usage-Based Insurance (UBI), combines leading-edge wireless communications and global positioning system (GPS) tracking technology. Telematic devices collect and analyze data from moving motor vehicles. UBI, or pay-as-you-drive insurance or pay-per-km insurance, involves installing a device that provides feedback on:
- The distance you drive
- The time of day when you are on the road
- When and how you accelerate and brake
- Cornering, speed and overall driving habits
Insurers track your driving behaviour in real time. The programs collect data on how, when, and where you drive to calculate your risk level. If you pose a lower risk of an accident than the average driver, you can save money on your auto insurance premium. Different types of telematic devices track different things. For example, a smartphone app can track your phone use while driving, but a plug-in device cannot.
Telematics Devices
Some of the standard devices that are used in the telematics systems your auto insurer may use to collect usage statistics and monitor driving habits include:
- Mobile apps
- Diagnostic port plug-in devices
- Bluetooth beacons
Also, depending on the provider, you can transmit driving data through a built-in option like OnStar.
Pros and Cons of Telematics Car Insurance
Like traditional car insurance, telematics is specific to the vehicle. The device will record the driving habits of whoever drives your car. So, your premium would also reflect your teenager’s driving habits when they borrow it. Here are some other benefits of telematics:
Pros of Telematics
- Cheaper insurance for good, low-risk drivers. Drivers can receive a premium discount of up to 25% by meeting behavioural incentives to reduce their kilometres driven and drive more carefully.
- The discount incentives encourage safe driving and reduce crashes
- Insurers use your telematics data to ensure claim accuracy and reduce fraud by analyzing driving information at the time of a crash
- In some cases, insurers can also track your car if it is stolen using GPS in the telematics system.
- It provides insights to improve your driving habits. Therefore, young and new drivers receive feedback to help them develop safer driving habits. For seasoned drivers, the feedback can offer tips for better mileage and proper car maintenance.
Cons of Telematics
- Premium increases: Some programs can raise your base rate if you’re a poor driver. So, this means that auto insurers using telematics are not limited to offering discounts.
- Discounts fluctuate based on driving habits.
- Mobile apps can’t always tell if you are a driver or a passenger, so if you’re riding in someone else’s car, you may occasionally need to dispute the data.
- Privacy concerns: In Canada, insurers’ data is subject to strict privacy policies and cannot be used without consent.
- Extenuating circumstances: Incidents of hard braking, for example, if a cyclist swerves in front of you, are not recorded in the data to confirm the action.
Telematics Discount Criteria
When renewing your policy, you can see whether you qualify for a discount based on your driving habits. You will also be notified of the amount of your discount. Some programs require you to keep the tracking device installed at all times to maintain a discount. Others track your driving habits for one policy period and apply the discount to all future periods.
To get the best discount, you generally must:
- Avoid rush hour and nighttime driving
- Have below-average mileage
- Avoid harsh braking and cornering
- Avoid quick acceleration
Drivers who see the best discounts may include stay-at-home parents, remote workers, retirees and gentle drivers.
Usage-Based Insurance is the Future of Risk Analysis
Usage-based insurance will offer premiums tailored to your habits and tendencies, as well as your attention to safety. Additionally, it also has the potential to promote safer habits. It’s important to remember that any of the best car insurance companies can offer telematics programs. However, no two programs are exactly alike. Our isure representatives can inform you about your policy and help you find the right program and insurer for your unique needs.
isure works with 25+ certified insurers to give you access to one of the largest selections of the best insurance company policies and options in Canada in the field of Telematics insurance. BTW, businesses having fleet business vehicles on the road can also benefit from Telematics insurance by allowing fleets to keep closer tabs on their vehicles for insurance pricing discounts – and improved safety.
What Does Telematics Insurance Mean?
1. Operational Benefits
No matter which insurer you end up with, a Telematics program can improve fuel efficiency, routing, logistics, preventive vehicle maintenance, and stolen-vehicle recovery.
2. Added Safety Benefits
Telematics-driven, regular safety performance scorecards, emergency response to get to an accident scene faster and a reduction in frequency and severity of accidents.
3. iSavings
Why are good drivers subsidizing the poor ones? Let’s save you money by combining your individual real driver performance with traditional claims, automobile usage and driver record history!
Telematics programs are currently offered for car insurance in Ontario, Nova Scotia, New Brunswick, Quebec, and Alberta. Other jurisdictions are considering the insurance systems.
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