Telematics – Usage-Based Insurance (UBI)

​​​​​​​​​​Insurance telematics – also known as usage-based insurance (UBI) or pay-as-you-drive – represents a shift in how insurance is administered and how premiums are calculated. Telematics has the potential to reduce your premium costs and generate significant benefits to society.​


How to Drive Your Premiums Down with Telematics

Telematics technology customizes insurance to your pattern of driving. It works by monitoring your real-time driving behaviours to provide an objective picture of your driving habits.  

Some insurers use telematics to monitor the key risk factors associated with driving a car. The technology assesses your driving habits, including: 

  • ​The distance you drive
  • The time of day when you are on the road
  • When and how you accelerate and brake

If you exhibit better driving habits or improve your driving behaviour, you can potentially save on insurance premiums. A telematics device creates an objective, personalized profile based on specific criteria. 


How Telematics Technology Works

Telematics was first used for auto insurance in Canada by one insurer in 2013 and has since grown to be included in a number of insurers’ product offerings. The telematics program gives you a small wireless device that acts as information and communication technology that can be quickly and easily installed in your car’s diagnostic port (typically under the steering wheel). 

The data collected is subject to strict privacy policies and not used for any other commercial purposes without consent. The insurer analyzes your data solely to determine savings and assesses typically the three driving habits listed above. 

With some programs, you can then track your driving habits and savings online, have your online information dashboard updated daily, and have your telematics discount calculated monthly. 

​Telematics programs are voluntary and you are fully informed of the variables your insurer collects for use in the program. Before signing up, you provide your express, informed consent for the collection, use and disclosure of the information used by the insurer.


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Other Benefits of Telematics

According to the Victoria Transport Policy Institute​ in British Columbia, widespread adoption of telematics has other potential benefits as a result of people driving less. They include: ​​

  • Reductions in congestion, traffic accidents, pollution, energy use, road and parking costs as well as more people walking instead of driving, which promotes health and fitness 
  • Opportunities for urban planners to explore other land-use objectives  

The Telematics Forecast

The number of insurers offering telematics is expected to increase. Canadian insurance companies are learning from the experiences of their counterparts in the U.S. and Europe.

In 2012, IBC conducted a survey in Ontario that found that the majority of those polled would be in favour of telematics. The option to choose telematics was most popular among people who drive less than 10,000 kilometres a year.

​Learn more by reading the Financial Services Commission of Ontario’s 2013 telematics bulletin.

Contact your local IBC consumer information centre ​for more information about usage-based insurance.