Usage Based Insurance – How it works


Usage based insurance (UBI) is an insurance program that rewards your good driving habits by decreasing your premiums. When, where and how you drive is all tracked by a small telematics device that is installed in your vehicle. The information is relayed back to your insurance company, who will determine the discount. But what are the nitty gritty details of this insurance model? What exactly is it promising? What do other people think about the program? Read on to learn these answers and more!

Usage Based Car InsuranceWhat Does UBI Promise Customers?

At a basic level, as long as you’re driving safely, UBI programs will reward you with a discount on your premiums. Most programs in Alberta work only one way, which means your premiums can only go down, not up! If your driving habits don’t qualify you for a discount, your premium won’t increase as a result, it will simply stay the same.

Is Canada Ready for UBI?

Check out the results from a survey conducted by Towers Watson in 2015 regarding usage based insurance and Canadian’s interest.

  • 82% of millennials (defined as individuals born between 1977 and 1992) like the idea of UBI and would be willing to try it. 78% of all other age groups were also interested in trying UBI.
  • 91% of millennials would try out UBI if there was no risk of their premiums increasing. This is compared to 88% of all other age groups.
  • 60% of respondents said they would be willing to change their driving behaviour if it meant receiving a lower premium.

So it seems that Canadians – especially millennials – are ready and willing to give usage based insurance programs a try.

Data Collection & Privacy

A major point of concern for many Canadians is privacy. Many people are worried about exactly what information is being collected, where it is being stored and how it is being used. Because UBI programs are relatively new, there is still a lot of education that needs to happen to inform people how the system works. The good news for hesitant Canadian’s is that all UBI programs must undergo a regulatory process to ensure that any personal information that is being collected is in line with privacy legislation.

Learn More About UBI Programs

Usage based insurance programs, while still quite new to Canada, are already driving interest. If you’re interested in learn more about usage based insurance programs, contact ARC Insurance. Our team of experts are able to answer any questions you might have.