Telematics & Usage Based Insurance (UBI)
Usage based insurance, or telematics, is a technology that combines telecommunications and measuring. Specifically, these are devices that measure how you drive. Information such as how hard a driver breaks, or how quickly they accelerate is recorded by most vehicles. The telematics device plugs into the onboard diagnostics (OBD) port and sends this data through cellular networks.
While this technology is new to the Ontario auto insurance market, it has been used in Europe, the United States and in Quebec. There are currently over 5.5 million usage based insurance policies active world wide and this number in increasing rapidly. By some estimates there will be over 100 million telematics policies by 2018! So what’s all the fuss about?
Insurance companies that offer telematics programs use vehicle data to assign discounts based on driving habits. It’s important to note that in Ontario this data can only be used as an incentive; companies are not allowed to surcharge, or refuse a risk based on telematics data. Discounts can range from 10% to 30% in some cases. On average, Ontario drivers have the most expensive insurance in Canada. The potential savings from using a telematics device make its appeal clear. There is also strong evidence that having a telematics device can improve a person’s driving habits.
Drivers can check their driving attributes through a convenient website or mobile app. This can be especially helpful for new drivers who might not recognize risky behaviours, like constant acceleration followed by hard breaking. Having a baseline for these habits makes it easy for drivers to track their improvements. Parents or driving instructors can review the data to provide coaching and constructive feedback.
Usage based car insurance isn’t for everyone. Young drivers and drivers who live in expensive insurance territories like Brampton and Etobicoke have the most to gain from these potential savings. A common complaint about car insurance is that people can’t help where they live, why should you have to pay for all the bad drivers? Telematics is a step towards fixing this problem. Insurers and good drivers have a lot to gain from auto insurance that is based on real driving habits.
There are no additional costs to the driver, the device and associated operating costs are included in your premium. Most vehicles built after 1996 have an OBD port and are compatible. Installation is easy and takes only seconds.
Call us today to see how much you could save!