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Ontario Car Accident and Insurance Law: What is Usage-Based Insurance?

Ontario drivers were introduced to usage-based insurance (UBI) in the spring of 2013.  Previously, Desjardins General Insurance Group was the only auto insurer approved by the Financial Services Commission of Ontario to offer this new type of insurance to Ontario drivers, the first of its kind.

An UBI system tracks and monitors a driver's driving habits through a device and charges an insurance rate based on the driver's usage.

According to Desjardins, some drivers may see their car insurance rates drop as much as 25%.  Ajusto, Desjardins' UBI device, is inserted in the diagnostic port inside the car. Some of the data tracked include:

  • how hard the driver uses the brakes,
  • how fast the car accelerates, and
  • the time of day the car is used.

Since the spring of last year, the provincial regulator approved other insurers to offer their version of usage-based insurance.  Two other insurers have joined Desjardins: Co-operators Group Ltd., which launched its UBI in Ontario on April 2, 2014, and Industrial Alliance Insurance and Financial Services Inc., which only offers UBI in Quebec.

Co-operators' UBI system is called the En-route Auto Program.  Drivers who enroll for the En-route Auto Program will automatically qualify for a 5% discount on their car insurance.  Like Desjardins, Co-operators is predicting up to 25% insurance rate cuts for drivers with exemplary driving habits.

Co-operators' insureds will receive a small black plastic box that clips into a slot under the steering column.  Like the Ajusto, En-route Auto tracks the drivers' driving and sends the information to a central database.

UBI - A Win-Win Situation?

On its face, it seems like UBI is beneficial for both the insurers and Ontario drivers.  UBI is beneficial for insurers because it will attract safer customers, which reduces the number of losses for insurers.  Ontario drivers often pay higher auto insurance rates, averaging $1,500/year, compared to drivers in other provinces.  Therefore, UBI is beneficial for drivers because they may pay a lower rate.

However, there may be some downsides to UBI.  Will drivers like having their driving behaviour  tracked all the time?  Further, in situations where family members share a car, the data on each driver is lumped together.  How will that lumped data accurately track usage and rate?

Probably, an issue most drivers will be concerned with is whether the information gathered will be inappropriately used.  Information collected by UBI devices may be disclosed to the police where required by law, without a driver's consent. However, Co-operators has stressed that the data will not be used for claims or lawsuits to determine fault in accidents.

How these concerns will affect Ontario drivers and create problems for Ontario drivers is unknown at this time.  Time will tell.

Car Accident Injury Lawyers at Bergeron Clifford

The lawyers at Bergeron Clifford are experienced personal injury lawyers who know and understand Ontario car accident and insurance laws. They have helped many motor vehicle accident victims in Ontario obtain financial compensation they deserve. If you would like to schedule a free consultation, call 1-866-384-5886.

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