What is Usage-Based Insurance?
Usage-based insurance is a new way to price auto insurance and is gaining popularity in the industry, but many consumers have questions regarding what it is, how it works, and if they should consider it.
The term usage-based insurance refers to a new way to calculate insurance premiums, while telematics refers to the information collected by a device placed in your car to record your driving habits.
Unlike traditional insurance rating methods used by insurance companies, usage-based insurance collects information on your driving habits directly from your automobile.
A small telecommunication device is placed in your vehicle and documents your driving habits such as how frequently you drive, to braking and acceleration and turning habits. This information is then combined with more traditional ways of rating.
Usage-based insurance provides the opportunity to calculate more accurate numbers than traditional rating procedures, but some people hesitate on the thought of being monitored by a device in your vehicle.
Usage-based insurance is offered by a few Canadian insurance companies on a voluntary basis. Intact Insurance, for example, is offering a discount to you if you enroll. If you’re a safe driver with a good record, you could save up to 25% off your annual auto insurance premium with my Driving Discount™. It’s your choice to enroll and you can opt-out at any time. Data collected will not be used to increase your insurance premium and any information collected is confidential and will not be shared with another insurance company. Your choice is risk-free!
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