Way back in 2015, usage-based car insurance was introduced for Alberta’s fleet vehicles to help owners and insurance underwriters better understand the risk involved with running an armada of automobiles. Since then it has also been implemented for regular vehicle owners, but the problem is that very few people know or understand what it is.
At first glance, usage-based car insurance can seem a little like “Big Brother.” But although it’s true that yes, your driving habits will be tracked, usage-based car insurance is not designed to penalize. In fact, it is meant to incentivize good driving habits by potentially resulting in lower insurance rates.
How Can Usage-Based Car Insurance Lower My Rates?
Usage-based car insurance works using telematics, which is basically technology that records data such as rapid acceleration and hard braking. Both are known indicators of speeding and reckless driving. Also factoring in is the type of vehicle you own, the amount of driving being done, the time of day you are driving, and the distance being travelled. There is usually a minimum amount of travelling distance required, as well, in order for the technology to be able to properly assess your driving.
If you demonstrate defensive driving habits and telematics provides you with a good overall driving score, you may earn yourself a discount on your car insurance. Obviously, careful driving is not only good for your telematics rating, but will also reduce your chances of getting in an accident.
Legislation stipulates that the application of telematics cannot be used to raise car insurance rates, so those who choose to try it will not be punished with higher rates when displaying poor driving behaviours. Essentially, there is no risk in trying.
Telematics assists in decreasing the number of accidents through the promotion of good driving habits, which, of course, reduces the overall number of claims. This helps keep car insurance rates lower for everyone. In the future (but not at the moment), telematics may also be able to help with the speed of processing claims. The data recorded by telematics devices can actually reconstruct collisions, so fault can be determined faster. Telematics also discourages fraudulent claims.
Does Telematics Actually Work to Improve Driving Habits?
Data collected by Intellimec.com has demonstrated a reduction in dangerous driving events for fleet operators using telematics. When drivers know they are being observed, they simply act better behind the wheel. The Intellimec study resulted in several findings, including:
- Unsafe events, which are described as quickly speeding up, braking hard, and changing lanes suddenly, decreased by nearly 50 per cent
- Speeding was reduced by 97 per cent
- An improvement in fuel economy of between five and nine per cent was recorded
- An overall significant improvement in driving habits was noted
More about how Usage-Based Car Insurance Works
Usage-based car insurance is run through mobile phone applications. Currently, the provider we work with that provides telematics is Intact, which has had its my Driving Discount app in use for a few years now. Telematics sends information about driving “scores” to the app so that drivers receive real-time information on how they are performing. Remember, however, that you can’t check your phone while driving! Drivers can earn a one-time discount of up to 10 per cent for initially enrolling in the program, and demonstrating good driving habits can earn you up to 25 per cent off your total car insurance costs.
Most providers of telematics programs allow you to opt in and out without penalty, and you may register as many vehicles as you like. If you are not the only driver of a particular vehicle, and may occasionally be a passenger, you will need to log in to the app to record that you were not the vehicle’s operator at a particular time.
Take care to read the privacy policy of any usage-based car insurance program you enroll in. You should be promised that your data will not be shared or sold to third parties.
If you are interested in trying out usage-based car insurance, let us know at Lane’s. We know the right questions to ask to ensure it is the correct option for you. Our experienced insurance brokers are trained in the ins and outs of telematics and will help clarify any questions you may have. Contact us at our Calgary, Edmonton, Banff, and Alberta offices today.
