UBI car insurance
7 minute read Published on Oct 18, 2025 by BrokerLink Communications
Canadians are facing higher-than-average insurance costs, with a 9.6% year-over-year increase between July and September 2024. Numerous factors, such as ongoing inflation, an increase in filed claims, and auto repair costs, contribute to the increase. Now more than ever, drivers, especially those who drive infrequently, are looking for smarter alternatives to getting a lower car insurance rate in Canada.
This is where usage-based insurance programs come into play. If you're a low-mileage driver, a student, or someone looking to scale back on their driving habits to save money on their insurance premiums, pay-as-you-drive coverage may be the option you've been looking for.
In this guide, we'll explain how this type of auto insurance works, its pros and cons, privacy considerations, and more, so you can get a better idea about whether you want to pursue this insurance solution in the future. Stick around for more info.
What is usage-based insurance (UBI)?
Usage-based insurance (UBI), also known as telematics insurance or pay-as-you-drive, is a type of car insurance model that determines your insurance premiums based on your driving behaviour.
Traditionally, when you purchase auto insurance from an insurance company, they'll consider numerous factors like your age, driving experience, vehicle, claims history, and more to calculate your risk profile as a customer. The higher the risk your insurer deems you to be, the more you can expect to pay for your coverage.
In contrast to using historical data and your demographics, usage-based insurance programs use mobile apps or telematics device trackers to monitor the following:
Mileage
Speed
Hard Braking and acceleration
The time of day you drive
Where you're driving to, and how often
This data collected is then used to help insurers calculate a more accurate risk profile, allowing safe drivers and low-mileage drivers to potentially pay less for their coverage.
Why usage-based car insurance is gaining traction in Canada
According to Cognitive Market Research, the Canadian usage-based insurance market is anticipated to reach around $1.98 billion in 2025, increasing at a compound annual growth rate of 21.5%. As we briefly mentioned, this growth rate is largely attributed to:
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Higher rates for insurance: Canadian Underwriter reports insurance premiums increasing by 31.1% across Canada from 2021 to 2023.
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Consumer willingness to share data: Many Canadians, especially Albertans, say they are willing to share their driving data if it means receiving lower premiums for their car insurance, according to a 2024 Market Report by Mintel.
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Remote and hybrid workers: Robert Hall reports that full-time in-office job listings fell from 69% to 63% between Q3 2023 and the end of 2024, demonstrating that flexible scheduling options are remaining consistent.
Who should consider telematics insurance
Usage-based insurance programs aren't for everyone. But for some Canadian drivers, it can be a game-changer. Here's a closer look at who can benefit from a UBI program:
Safe drivers
Those with safe driving habits could earn discounts up to 25% from many insurers by opting for usage-based car insurance instead of traditional coverage.
Low-mileage drivers
Are you a remote or hybrid worker? Do you carpool or take public transit to work? If you know for certain you drive under 12,000 kilometres a year, you'd be perfect for a usage-based insurance program.
Young drivers and seniors
Young drivers, especially those in university, and seniors who have infrequent driving habits often seek usage-based insurance solutions to save money.
Those living in the city
Canadians living in cities like Toronto, Vancouver, or Montreal who use public transit or walk to their destination may drive less than the average motorist. If you're someone who uses their vehicle infrequently, you can experience savings on your auto insurance by installing telematics technology in your car.
Pros and potential drawbacks of the UBI program
Usage-based insurance offers numerous benefits to Canadians, but it doesn't come without some drawbacks that you need to be aware of:
Pros of Usage-Based Insurance |
Cons of Usage-Based Insurance |
|---|---|
|
It can potentially lead to significant savings on your insurance premium. |
Privacy concerns. |
|
Auto insurance costs reflect your actual driving behaviour, rather than statistical demographic data. |
Can put yourself at risk of a rate increase if you are not a good driver. |
|
Option to install UBI technology in your vehicle or use a smartphone app. |
Some driving behaviour may be incorrectly recorded. For example, hard braking to avoid hitting a deer on the road. |
Encourages drivers to adopt saving driving habits. |
Usage-based insurance is not available in all provinces or territories. |
How telematics technology impacts your auto insurance premiums
As we mentioned, how usage-based insurance works is by allowing a UBI app or physical device in your vehicle to track your driving habits, which can impact your premiums both positively and negatively. Let's take a closer look at how:
How driving habits are scored
Most UBI programs will assess:
Hard braking and rapid acceleration.
Speeding or aggressive turning.
Your distance travelled.
Whether or not you use your phone as you drive.
Driving during riskier hours of the day, such as at night.
These factors are then converted into a risk score by your insurance company. The safer and smoother your driving is, the lower your risk calculation will be, and the more of a discount you'll receive for your good driving.
How discounts are applied
Before you're eligible to save with usage-based insurance, insurance companies will typically monitor your driving behaviour for three to six months before adjusting your insurance rates to reflect your habits. Other times, insurers offer sign-up discounts for the interim, and then more savings once your data is collected. Additionally, some insurance companies may also add surcharges to your rates for high-risk behaviour.
Privacy and data security with telematics devices
One of the biggest concerns about opting into pay-as-you-drive auto insurance is the type of data collected and how it's used. Usage-based insurance companies may collect the following data:
Your GPS location and driving routes
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Driving speed, acceleration, and the time of day you're driving
Phone usage while behind the wheel.
So, how is this data used? Reputable usage-based insurance programs like Desjardins, CAA Insurance, Allstate, and Belair Direct ensure user data is encrypted while also following strict data privacy regulations like the Personal Information Protection and Electronic Documents Act (PIPEDA).
It's important to note that depending on the car insurance company you work with for your usage-based insurance may use your data differently. For example, while some insurers may only use the data for their underwriting frameworks, others may choose to analyze it for marketing or research purposes.
Hypothetical driver profile
Jason, a 34-year-old living in Calgary, works remotely for his company. Because he uses his vehicle infrequently, he decided to sign up for a usage-based insurance program with an insurer. Because she's new to the program, she received a 10% intro discount. After driving for six months:
He only logged 5,000 kilometres
Rarely drove after 9:00 pm.
Had little risky behaviour tracked.
His insurer rewarded him with a 22% renewal discount, saving Jason nearly $430 annually.
Will my car insurance premium go up if I speed occasionally?
Not necessarily. How usage-based insurance works is by analyzing your driving habits over time, rather than single incidents. Therefore, speeding will only increase your premiums if you're consistently driving over the speed limit.
Can I opt out of the UBI program after I have enrolled in it?
Yes, you can opt out of usage-based insurance once you've enrolled. However, you may have to wait until you're up for a policy renewal; otherwise, you may be charged a cancellation fee or an additional charge on your vehicle insurance policy.
Is telematics auto insurance available in all provinces?
The availability of telematics programs in Canada varies by province. For example, insurers offer these programs to drivers in Ontario, Quebec, New Brunswick, and Nova Scotia currently, while other provinces, British Columbia, are open to the idea of telematics programs, but have yet to move forward with this technology.
What happens if someone else drives my car?
If someone else drives your vehicle, their habits may be recorded, but only if you have a physical device installed in your vehicle. If you have an app, their driving behaviour will only be recorded if you are in the vehicle with them.
Can I still qualify for other discounts even if I have telematics insurance?
Yes, even if you have telematics insurance, you can still qualify to save a certain amount on your premiums, such as bundling your policies, installing winter tires or security systems on your vehicle, and more. Make sure to ask your insurer whether you qualify for additional savings.
Will UBI programs affect my credit score?
No, telematics coverage will not affect your credit score. While some insurers have the right to check your credit when calculating your rates (Alberta and New Brunswick), UBI programs focus strictly on your driving behaviour.
Usage-based insurance vs. traditional car insurance
Besides how UBI programs affect your premiums, you may be wondering how they affect other aspects of your coverage. Take a closer look at our comparison table below:
Feature |
Traditional Car Insurance |
Usage-Based Insurance |
|---|---|---|
Pricing |
Based on historical driving and demographic data. |
Based on your behaviour. |
Data Use |
Minimal. |
Real-time telematics. |
Potential Savings |
Limited to your insurer and driving profile. |
High for those who are good drivers and low-mileage drivers. |
Privacy Concerns |
None. |
Data is encrypted, but unexpected cyber crimes may still occur. |
Types of Coverage |
Varies by province. |
The same as traditional auto coverage. |
Are you a good driver looking to compare quotes and avoid an inevitable rate increase? Contact BrokerLink today!
Are you still on the fence about whether UBI insurance is right for you? Speak with an insurance broker from BrokerLink to learn more about how much money you could save by making the switch!
BrokerLink has years of experience partnering with drivers across Canada, helping them save money on car insurance coverage. With access to numerous policies from some of Canada's top insurance companies, our team can help you shop around, unlock savings, and ensure your final coverage reflects your needs. Policies we can help with include:
Whether you need help calculating your mileage, have questions about cars with the lowest car rates, or have other concerns about your coverage, BrokerLink has got you covered.
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