Usage-based car insurance quotes
Usage-based insurance (UBI) uses telematics to help you limit the price you pay for car insurance. Quickly compare quotes from Canada’s top providers, for free.
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What is usage-based insurance?

Matt Hands, VP, Insurance and MoneySense
Usage-based insurance (UBI) is a utilizes telematics technology, which is the merger between informatics (the use of data to solve problems) and telecommunications (the exchange of information through wire, radio, or optical systems).
In order to opt-in to a usage-based insurance program it requires either a telematics devices installed inside a vehicle or via an app on your smartphone. Both systems measure your driving behaviour data like acceleration, turns, distance travelled, and braking to name a few. That data is shared with your insurance company to prove that you are consistently a good driver, so that they can reward you with cheaper car insurance.
What are telematics devices
Telematics devices began as a “black box” that you plugged into your cars’ computer system. While there were earlier commercial applications to manage fleets of trucks and expensive construction equipment, US personal auto insurer, Progressive, filed for a patent in 1996, receiving approval in 1998.
Now, telematics, or what the personal auto insurance industry is calling ‘usage-based insurance’ can be done with an app on your smartphone making it much more accessible to the masses. This app-based insurance began in Canada in 2013. Its popularity is surging in the US and Europe, and experts forecast the global automotive telematics market to grow 18% per year between 2018-2022.
Types of usage-based insurance in Canada
In Canada, there are 2 types of car insurance based on usage. Pay-as-you-drive (or pay-as-you-go) measures distance travelled. The other is pay-how-you-drive, which measures things like acceleration, turn handling, and braking. UBI is only used to reduce your premium, so you’re not penalized for a bad score, only rewarded for a good one. According to telematics.com, the average premium reduction is around 25%.
Pay-As-You-Drive Insurance/Pay-As-You-Go Canada Insurance
In 2018, CAA introduced their MyPace® pay-as-you-go insurance policy, or a pay-as-you-use your car insurance model. They ask all the usual questions like the make and model of your vehicle and your driving history, but they leave out how much driving you’ll be doing. For that, they’ll use a black box telematics device plugged into your car or an app to measure the distance you travel.
While you pay a cheaper base rate than you otherwise would with a normal insurance policy, the more you drive, the costlier it becomes. In fact, CAA themselves says if you’re driving more than 9,000 km per year, this might not be the plan for you. They’re targeting drivers who commute to work via public transit, walking, or cycling and limit the use of their car to the weekends to run errands.
Pay-how-you-drive insurance
Pay-how-you-drive uses either the telematics device or downloaded app to your smartphone. Instead of distance, it measures your driving behaviour. A driver who breaks with enough time, and doesn’t speed, handles a turn gently, and limits their driving to off-peak hours, can see a reduction in their premium.
It might also measure the location of your car at all times, a nice security benefit. It can also read the type of roads on which your travelling, your direction and speed prior to a collision, the force of impact in an accident, and report said collision to local authorities.
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The pros & cons of usage-based insurance
PRO |
CON |
Removes biases typically set by demographics like age and gender. |
Privacy concerns, the mere presence of the box can be stressful to some drivers |
Encourages you to drive safer and avoid collisions. |
Currently, black boxes don’t differentiate between drivers, you may not get your full premium reduction if another driver is making mistakes. |
Young drivers or drivers with a history of convictions can pay significantly less. |
If you move home or office, driving more can reduce the discount. Don’t lie about your address, though. Being honest with your provider is always the best policy anyway. |
Track your car if it’s stolen or assist in proving innocence after a collision. |
Innocent speeding mistakes could affect the premium reduction. |
Lack of experience driving doesn’t mean you’ll pay more. |
In November of 2021, Travelers received approval from the Ontario government to allow for surcharges for bad driving. Other insurers may follow suit. |
You’re not paying for the kilometres you’re not using. |
The best usage-based insurance companies offering telematics
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Fast facts |
Allstate Drivewise |
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Ready to save with usage-based car insurance?
Take the telematics challenge and prove why you deserve cheaper car insurance. Compare quotes from top usage-based insurers to find the right program for you.
Frequently asked usage-based insurance questions
Is telematics insurance worth it?
Can usage-based insurance increase the rate you pay for car insurance?
How much can you save with usage-based car insurance?
Can you turn telematics devices off?
Is usage-based insurance available across Canada?
What cars have telematics devices built-in?
Why should I consider usage-based insurance?
Why is usage-based insurance use increasing?
Matt Hands, Business Director of Insurance
With 6+ years of experience at Ratehub.ca, Matt’s focus has been on growing its newest business unit, Insurance. He is a thought leader and a valuable resource to respected publications across Canada. read full bio
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