Usage-Based Insurance and Telematics: The Road to Cheaper Car Insurance?

As 2020 has trickled into 2021, the COVID-19 pandemic has continued, and many Ontarians are still working from home and driving a lot less.  So how can drivers pay less for car insurance?  There are two ways being offered by some insurers to help save on car insurance premiums.

The first is usage-based insurance (or “UBI”).  In this model, drivers pay a basic daily premium, plus an additional charge based on how much they actually drive.  A device installed in the vehicle tracks mileage and reports back to the auto insurer via the driver’s smartphone.  For drivers who log substantially less than 9,000 km per year, UBI may be a good fit.  However, a change in job or lifestyle resulting in increased mileage can mean higher premiums, so caution is required before choosing this option.

The second involves more substantial use of telematics, or the convergence of telecommunications and automobile information processing.  In a nutshell, this type of insurance monitors driving habits through either a telematics device installed in your car, or an app on your smartphone (or both).  The device monitors data including location, speed, distance travelled, acceleration and deceleration rates, cornering speed, time of day, and just about anything else the insurance company wants to track.  Safe drivers can potentially achieve insurance discounts based on the data collected.  However, as of November 2020, drivers can also potentially face surcharges if they exhibit higher-risk driving habits.

In the end, it may be possible to reduce your car insurance premiums through one or both of the above models.  However, the nature of these discounts and programs varies from insurer to insurer, so be sure to contact your broker or visit your insurer’s website for more information.

Oatley Vigmond is Ontario’s Personal Injury Law Firm.  If you or someone you know requires assistance with an insurance or personal injury claim, we may be able to help.

About the Authors


Adam Little earned his undergraduate degree from the University of Toronto in 1996. He graduated from Queen’s University Faculty of Law in 2000 and was called to the bar in 2002. Adam was practicising on Bay Street for a leading Toronto litigation firm that represented doctors in medical malpractice claims when he realized that helping people through personal injury litigation was what he wanted to do. “I wanted to work for the best,” he said. A partner at Oatley Vigmond had written the best-known book available about addressing jury trials, which Adam had read and admired. He wrote to the partner, went through an intense interview process and became a partner at the firm in 2005.

To learn more about Adam, please click here.