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Whether you're a young driver, live in a big city, or own a car that's subject to high insurance rates, usage-based insurance policies can lower the cost of your premiums by rewarding you for good driving habits.

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Your usage-based auto insurance questions, answered.

How does usage-based insurance work?

Usage-based insurance (UBI) uses on-board technology to monitor your driving habits and adjust your premiums based on how you drive.

With UBI, a small telematics device is installed in your vehicle and transmits data back to your insurer while you're on the road. The device logs driving metrics like braking, cornering, acceleration, speed — even where you drive and what time of day you're on the road. If the data show that you're a low-risk driver, you might qualify for a significant discount on your car insurance premiums.

Why get usage-based insurance?

Simply put, UBI is a great way to obtain cheaper car insurance for your vehicle. With a UBI plan, you pay for the kind of driving you actually do, instead of the driving the insurance company thinks you do. And if you're a careful driver, your premiums will reflect that.

And there's another benefit: you get instant feedback on your driving habits. Many insurance companies have apps that give you real-time insights into how you drive and share recommendations on how you can become a better driver.

Recent studies also show that telematics technology really does make for safer driving. One report analyzed over 200 million miles of data collected from young drivers since 2011.

Some very promising trends emerged: for instance, the report showed a 40% drop in crash risk for new drivers with usage-based insurance compared to young drivers without a UBI plan.

Not surprisingly, 80% of UBI customers agreed that technology helped them become better drivers, and many said they began to monitor their behaviour behind the wheel in an effort to reduce their premiums.

All in all, UBI policies can save lives and keep the cost of insuring your vehicle to a minimum.

How does telematics technology lower my premiums?

Traditionally, insurers use very blunt methods to calculate car insurance rates. Demographic data, like age and gender, combined with a driver's past record (number of years on the road, number of traffic violations and claims, etc.) were the only ways an insurer could gauge how risky a driver was on the road.

But usage-based insurance plans use your real-world driving data to determine if you're a safer bet than other drivers with the same basic profile.

The first step is installing a little black box into a diagnostic port on your car (usually near the steering column). The unit is about the size of a matchbox, and it collects data on your driving habits and then transmits the data through cell phone networks and back to your insurance company.

Once your insurer has the data, it can adjust your premiums accordingly. Remember: safe, cautious driving equals cheaper car insurance.

How much money can I save with usage-based insurance?

Usage-based insurance customers usually see a savings of 10% to 25% on their yearly premiums. Drivers who fall into traditional high-risk categories (inexperienced drivers, drivers in big cities, etc.) can save even more.

What data does a usage-based insurance plan collect?

The types of data collected vary from insurer to insurer, but most telematics boxes capture four key driving metrics: acceleration, braking, cornering, and speed. Some devices also record where and when you drive. Here's how it's done:

  • Acceleration measures the rate at which the speed of your vehicle changes within a set period of time. If you increase your rate of speed rapidly (by stepping hard on the accelerator), the telematics device records that information. This is measured by an accelerometer in the telematics box and is sent to a data collection facility at the insurance company. Insurers consider rapid acceleration to be a risky driving habit, so drivers who want to minimize their premiums should avoid accelerating too hard too often.
  • Braking is measured in a way similar to how acceleration is measured. Your vehicle's telematics box records your braking data and transmits it to the insurance company. A pattern of hard braking, where you reduce your vehicle's speed rapidly, is a strong indicator of unsafe driving tendencies and could prevent you from earning lower insurance rates.
  • Cornering measures the rate and angle a vehicle travels around a corner. Approaching sharp corners or bends in the road at higher speeds is judged as a risky behaviour by your insurer and should be avoided.
  • Speed is calculated via the GPS in your telematics box and is compared against a database of speed limits from across the country. Staying at or below the speed limit will greatly help you reduce your premium.
  • When/where you drive. Most telematics boxes have GPS capabilities that let insurers see when and where you drive. These metrics have a major impact on your risk profile. Where you drive and when you're on the road are two of the biggest predictors of future insurance claims.

Once these metrics are collected and analyzed, your insurance company will determine if you qualify for a premium discount.

Can my car insurance rates increase with a usage-based insurance plan?

It depends on which province you live in.

In Ontario, for example, insurance companies cannot use the data they collect to penalize you by increasing your rates, cancelling your policy, or determining a claim decision. They can only use the information to build your driving profile and help you reduce your insurance payments.

In Quebec, surcharges can be added to your premiums if you're classified as a riskier driver based on the data collected from your telematics device.

Do UBI plans all use the same data and apply it in the same way?

No. Each insurer calculates its UBI rate discounts differently. For example, some assign more importance to speed and acceleration than to other variables. Others place greater weight on when you drive. It just depends on the insurer.

Is usage-based insurance available in my province?

Usage-based insurance is widely available in Quebec, Ontario, New Brunswick, Nova Scotia, and Alberta. Meanwhile, Saskatchewan hasn’t made any further announcements about integrating a UBI program since its pilot program for motorcycle drivers ended in 2014.

British Columbia is taking a "wait and see" approach to UBI due to some of the privacy concerns posed by the technology. Manitoba, Prince Edward Island, and Newfoundland and Labrador haven't made announcements about their own plans for introducing UBI — at least, not yet. UBI is a newer insurance option in Canada and provincial governments are still working out the kinks to ensure that it can be implemented safely and ethically.

Check to find out when UBI becomes available in your area.

Province / territoryIs usage-based insurance available?
British ColumbiaNo
New BrunswickYes
Newfoundland & LabradorNo
Northwest TerritoriesNo
Nova ScotiaYes
Prince Edward IslandNo

How do I get a quote for usage-based insurance?

Contact us at, and we'll connect you with a usage-based insurance expert.

Does telematics technology have any drawbacks?

Yes. Drivers and critics alike have two main concerns about this new technology:

Telematics technology raises some privacy concerns. Critics say the information that's collected could be disclosed to third parties or be used to reject claims. Usage-based insurers maintain that your data will remain private and secure.

Some worry that a usage-based insurance plan may actually work against you. If your insurer classifies you as a risky driver after analyzing your telematics data, in some jurisdictions, your premiums could be increased as a result.

It's important to be well-informed about what telematics insurance can offer and who your data can and cannot be shared with. Make sure your insurer requires consent before they can share your information with a third party.

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