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Greater Toronto Area (GTA) & Car Insurance

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New device in your car to lower your insurance premiums

You now have a new way to save on your car insurance. But wait, nothing comes for free from insurance companies, even discounts. Desjardins Insurance has developed a new way to assess your car insurance rates, which has proven to achieve an average of 12% savings for the insured.  This new method, called UBI—“Usage Based Insurance”—is designed as a pay-as-you-go system, as it assesses your driving with a wireless device that plugs into a vehicle’s diagnostic port.  The device tracks the distance driven, the time of day that the car is driven, and your driving habits. Your way of driving your car is evaluated based on the degree and frequency of hard breaking and acceleration.

Of course, you may ask yourself, isn’t the insurance company now trying to know too much private information about your life and habits? Also, you may be an aggressive but a very good driver with a perfect driving record, does it mean your car insurance rate should be sky highas a result of the information that the device collects? However, Desjardins Insurance claims that the driving data, which is updated daily, is only available to the driver.  Further, the company guarantees anyone who tries this new device will not see an increase as a result of the collected data. It is important to stress here that these promises are so far made only to the test group, who will try these devices first, otherwise, what is the use for the negative data collected by such devices?ew way to save on your car insurance. But wait, nothing comes for free from insurance companies, even discounts. Desjardins Insurance has developed a new way to assess your car insurance rates, which has proven to achieve an average of 12% savings for the insured.  This new method, called UBI—“Usage Based Insurance”—is designed as a pay-as-you-go system, as it assesses your driving with a wireless device that plugs into a vehicle’s diagnostic port.  The device tracks the distance driven, the time of day that the car is driven, and your driving habits. Your way of driving your car is evaluated based on the degree and frequency of hard breaking and acceleration.

In addition to the probability of a discounted rate, Desjardins staff members who tested the device claim that another perk of the device used for UBI is the opportunity they had to see their driving statistics. Nevertheless, while many staff members reported an improvement in their driving habits, once the data was reviewed daily, this sounds more like a marketing plot to add more positive light to the have everyone install such a device in their car

Despite all the questionable perks to the driver, there are still a lot of logistics that need to be evaluated before allowing this program to become the norm. The Ontario Board that governs insurance companies is developing criteria that protect the driver. This includes ensuring that the evaluation of what is “risky” driving is fair and just, and that the costs of the UBI device and its maintenance is covered by the insurance company—which avoids the goal of the insured’s savings being compensated with additional costs.

Overall, 2010 changes in the insurance law showed how biased the Ontario government has been towards increasing the revenues for insurance companies, while drastically reducing car accident benefits to drivers. At the same time, the amount of benefits each of us has been paying so far has not seen much reduction since 2010. It is up to each of you to decide whether the reduction in your monthly insurance payment is worth the cost of losing some privacy, potentially high premiums for aggressive drivers with spotless record, and additional fights with your insurance company if the device malfunctions (i.e. you disagree with what it says). However, remember, no insurance company will introduce a program, which is not profitable for it in the long run. If the proposed program goes through some testing successfully, insurance companies may be able to bully the Ontario government into making such devices mandatory. So, your limited freedom of choice regarding car insurance may once again be taken away.

Sources:

Singh, Harmeet. “FSCO lays out how insurers should take on usage based insurance programs.” Canadian Underwriter 13 February 2013.

Singh, Harmeet. “Desjardins Launches usage-based insurance program in Ontario, Quebec.” Canadian Underwriter 13 May 2013.