Practicing safe driving habits each time you get behind the wheel is a great way to make Canadian roadways safer for all. If you consider yourself a safe driver and want to experience a safe driver discount to save money on your insurance costs, you may want to consider telematics car insurance. Stick around to learn more.
What is telematics insurance?
First things first, what exactly is telematics insurance? Telematics insurance is a type of policy offered by certain insurance carriers that rewards drivers with good driving habits. This telematics program collects driving data using a black box or a cellular phone that is installed into their car. The collected data is sent to the driver's insurer, who then uses this data to create a risk profile of the driver. In turn, the insurance company may lower the customer's insurance premiums so they can save money.
How does telematics car insurance work?
How telematics insurance works will vary differently between insurance companies offering this type of program, weighing certain safe driving habits as being more important than others. This means that the types of discounts safe drivers experience can vary between insurance companies, which is why it's important to review each telematics program to find one that meets your needs.
Nonetheless, a standard telematics program will either work with a smartphone app that you can download right on your phone or through a telematics device you'll need to install in your vehicle. Once installed or downloaded, the telematics devices will begin tracking your driving behaviour, which is then sent to your provider.
What driving data does telematics technology collect and send to my insurance company?
As we mentioned, insurance companies use telematics devices to collect data on drivers. So, what kind of data is collected?
Vehicle acceleration and braking habits
The first aspect of a driver's driving habits is how they accelerate their vehicles when they brake. Essentially, insurance companies are looking at whether you accelerate quickly or slam on your brakes often, as it can indicate how safe of a driver you are. It may also look at your fuel consumption as you drive.
What time of day you drive
The next piece of telematics data collected is the time of the day you drive. As driving at night and during rush hour puts you at risk of getting into an accident, safer driving practices would include avoiding these times of the day.
Whether you use your phone or not
Distracted driving leads to accidents and is a big no-no when it comes to insurance telematics. Make sure you stay off your phone at all times.
Your driving speed
Another piece of telematics data collected is the speed at which your car travels. Driving the speed limit will work in your favour with this type of telematics program.
What are the benefits of a telematics program?
There are many benefits to telematics programs, making them an increasingly popular choice amongst drivers, including the following:
Lower your auto insurance premiums
One of the main benefits of insurance telematics is that it can help drivers save money on their insurance costs. In fact, many insurers provide instant discounts to customers upon signing up for the program.
Encourages safe driving habits
Knowing your driving habits are under review can help drivers be more motivated to follow the rules of the road, making it safer for all motorists.
Collected data can help during an insurance claim
Should you get into a car accident, the data collected can help your insurers better compensate your insurance claim.
What are the drawbacks of UBI programs?
While there are advantages to using telematics data being collected, there are some drawbacks we should mention:
Data privacy
Like all technology, data privacy concerns can be raised as there's a possibility of your telematics data being sold to third parties. There are also concerns about a data breach and what it would mean for customers.
Data interpretation
Another point of concern is how the data points are interpreted by insurers in the sense that it could impact your cost savings. For example, some insurers may favour those who don't drive between 12 am and 4 am, while others may prefer drivers who don't accelerate or brake as abruptly.
Context of driving behaviour could be misconstrued
Lastly, a driver's behaviour could also be called into question and be misconstrued. For example, if a driver slams on their brakes to avoid hitting a cyclist, the braking could be recorded as bad when, in reality, you were braking to avoid a collision.
Is usage-based insurance (UBI) and telematics insurance the same thing?
Usage-based insurance is similar to telematics insurance. However, rather than recording a driver's safe driving habits, usage-based insurance rewards low-mileage drivers. If you drive under 10,000 kilometres a year, this money-saving program may be for you.
How much does telematics insurance cost?
Insurance rates for telematics insurance will vary between companies, similar to how all other types of coverage vary. We recommend getting a quote from different providers to compare rates and coverage options.
Can telematics increase your insurance rates?
Most telematics insurance programs are designed to help customers save money by demonstrating safe driving habits. However, depending on the insurance company, you may be penalized if your telematics data indicates risky driving behaviours like hard braking, speeding, or rapid acceleration.
In some provinces like Ontario, insurers are able to increase premiums using telematics data to ensure that drivers benefit from this type of technology.
In any case, it's essential that you review your policy terms and conditions to ensure that you fully understand how the data is used and whether bad driving habits can impact your insurance costs.
What does telematics insurance include?
As you know, car insurance in Canada is mandatory for all motorists, no matter how often you drive. While mandatory policies and their minimum requirements will differ between provinces, there are also optional types of auto insurance policies you'll need to consider:
Third-party liability insurance
Third-party liability insurance is mandatory in all provinces. The purpose of third-party insurance is to protect policyholders in the event they cause property damage or bodily harm to a third party while operating their motor vehicle. Should a lawsuit be filed against the policyholder for damages, their insurance will cover the cost of medical bills, vehicle repairs, legal fees, and other associated expenses related to their settlement.
Accident benefits coverage
Accident benefits coverage is also mandatory for all provinces except Newfoundland. The purpose of this insurance is to pay for medical expenses and other fees associated with your recovery if you are involved in a car accident, whether you, your passengers, or pedestrians are injured, regardless of who is at fault.
Uninsured motorist insurance
Uninsured automobile insurance is, again, mandatory in all provinces. This policy protects you if you are involved in a collision with an at-fault driver who is either underinsured or uninsured by covering the cost of vehicle repairs. This insurance will also protect you if you are involved in a collision with a hit-and-run driver.
Direct compensation - property damage (DCPD)
Direct compensation - property damage (DCPD) is not mandatory in Ontario, however it is not optional in all other provinces. The purpose of this policy is to ensure you are quickly compensated following a collision with an at-fault driver by allowing you to deal directly with your insurance company rather than a third-party provider.
Collision coverage
Collision car coverage is optional for motorists. With collision auto insurance, repairs required for your vehicle following an at-fault accident will be covered by your insurance company up to your policy limits. Note that before your provider will cover the repair costs, you will need to pay a deductible.
Comprehensive car insurance
Comprehensive car coverage is similar to collision insurance. However, this policy will cover the cost of repairs your vehicle requires following a non-collision event. Common perils include theft, vandalism, certain weather conditions, and fire damage. Again, you'll need to pay a deductible before your insurance provider will cover the remaining costs.
Accident forgiveness coverage
One final type of optional car insurance coverage popular among Canadian drivers is accident forgiveness. Forgiveness is additional coverage that can be added to your car insurance policy as an endorsement to protect your driving record and to help prevent your insurance premium from increasing if you have an at-fault accident claim.
Note: coverage varies by province.
Who should consider insurance telematics in their vehicle?
Telematics insurance is a great option for numerous Canadian drivers, including:
- Those who are cautious, safe drivers.
- Those who drive short distances throughout the year, like remote workers or retirees.
- New drivers who are trying to build a positive driving history to lower their premiums in the future.
- Infrequent drivers who only drive on the road when the conditions are safe, like seniors.
Ultimately, driver monitoring is ideal for those who are safe drivers and dedicated to following the rules of the road.
Does telematics technology help reduce car accidents?
Absolutely, insurance telematics can help reduce accidents as it encourages safe driving. Knowing that your habits are being monitored can help individuals be more mindful when they are behind the wheel.
Some programs also offer real-time feedback and driving scores to help drivers identify where they need to improve. By preventing the use of cell phones, hard braking, and speeding, which all contribute to accidents, a telematics device can make the road safer for everyone.
Get affordable auto insurance with BrokerLink
Renewing car insurance can be a hassle. But with the help of BrokerLink, you can get back on the road in no time. With years of experience and access to multiple auto insurance policies from some of Canada's top insurance companies, our brokers are able to customize your insurance coverage, access discounts, and answer any questions you may have, like what the best pickup trucks are and what different road construction signs mean.
If you're up for an expired car insurance renewal and want to work with BrokerLink, visit us at one of our many locations across Canada. You can also contact us by phone and email! If you're still browsing for telematics insurance, get a free insurance quote using our online quote tool!
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