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Usage Based Auto Insurance in Ontario


When George Orwell painted his view of a dystopian future where every move a person makes is watched by all-knowing overseers, he didn’t count on cost savings for consumers as a result of micromanaged information collection. However, that’s exactly what’s happening for motorists who share their safe driving habits by way of a small device that “big-brothers” information from your vehicle directly to insurers.

What is Telematics?

A general term, telematics refers to long-distance transmission of data, a specialized branch of information technology. When referring to cars, it could be in relation to two-way communications systems, such as GM’s OnStar service. However, when discussing car insurance, it has to do with the reporting of vehicle operation data. A small data transmitter is plugged into a socket under the dash, near the steering column. It automatically transmits and records data from your vehicle, things like acceleration, braking and time of day.

Participating in Usage-Based Insurance Programs

While it’s a little unsettling to think of having a computer “spy” on board, it’s important to know that insurance programs using telematics operate in a positive, rather than punitive, way. Your premiums can only be reduced through the use of telematics; they cannot be raised. Participation in a usage-based insurance program is voluntary. You’ve got to sign up to receive a telematics device. Two popular Ontario programs are Plug’n Save and the en-route Auto Program.

Effects on Premiums

What you pay for car insurance is based in part on how your insurer evaluates your safety as a driver. Part of that is based on your driving history and part is based on the demographic group to which you belong. Without something like telematics reporting, there’s no input on how you drive now into your current policy.

Insurers who offer telematics programs usually offer a discount just for enrolling. This could save you 5 to 10 percent right away and in Ontario, with the highest car insurance rates in Canada, that could mean $150 or more annually, on top of other discounts you may already receive.

When your safe driving habits are demonstrated through telematics data, you could save even more when you renew. Discounts up to 30% are possible with some Ontario telematics programs.

How to Maximize Usage-Based Insurance Results

Your telematics device records incidents of rapid acceleration, hard braking and the time of day you drive. Depending on the program you choose, speed and distance data may also be collected.

When you accelerate faster than 12 km/h in one second, your risk of accident increases. When speed decreases by the same amount, your risk climbs again. Adjusting your driving to minimize these incidents will help maximize your discount.

Time of day is another major contributor to accidents, with the most dangerous time of day being between midnight and 4 a.m. Limiting the amount you drive during these hours will also boost your discount.

Telematics provide real-world, real-time data to your insurance coverage. It gives a driver some control over their own car insurance premiums by raising awareness of the positive effects safe driving habits can have.

Pros of Usage-Based Car Insurance

risk reward

While having your driving monitored may seem like an invasive government practice from the future, it turns out it can be beneficial. Once the insurance company receives all of the data from the telematics device, it processes the information and comes up with a rate. If you’ve driven well, you’re rewarded with lower rates than you’d be able to get from standard insurance policies.

You’re not the only one who wins. Insurance companies report that drivers who use the device often are more careful behind the wheel which means lower rates of accidents and fewer payouts. Most companies pass these savings off to their customers, resulting in lower rates.

Cons of Usage-Based Car Insurance

One study by the Deloitte Consumer Group revealed that almost half of drivers say they would require a hefty discount of 20 percent or more before agreeing to have invasive technology installed on their vehicle. Only the good drivers would agree to such a thing, resulting in a disproportionate drop in premiums for good drivers without an increase in premiums for bad drivers. That would mean less profit overall for insurance companies, or a hefty rate increase for bad drivers to offset the decrease for good drivers.

Without requiring all drivers to use the devices, insurance companies would end up with a lopsided clientele base. Good drivers would flock to companies with the discounts while bad drivers stick with traditional insurers.

There are also privacy concerns. The devices would know if you got into a small fender-bender that wouldn’t normally be reported, causing unnecessary claims that could damage driving records and raise premiums.

The insurance industry is currently dealing with a set of unknowns and hypothetical situations. Nobody knows for sure how full-scale implementation of the devices would be, and right now there is only a small group of drivers participating in the limited telematics tracking programs available. Until a larger group is available for sampling, nobody knows for sure how such technology could impact the way people drive.


  1. bliz September 12, 2017 at 1:59 pm - Reply

    why is it called “good drivers” versus “bad drivers”?….how about “spineless robot drivers” versus “human beings that drive in the realities of the road”? so if you literally go over a certain limit or brake a certain way etc without any context to the traffic situation and area you live and type of roads etc then the assumption is any slow, defensive, passive, robotic driver that are actually “bad” drivers in faster, denser, more complicated contexts of traffic or dealing with other bad drivers actions are “good” drivers simply by virtue of some data with zero context…???…how many highway accidents and road rage is caused by people driving at exactly the speed limit? how many real life drivers dont make left turns on orange after waiting 20 minutes? how many real life drivers have perfect brakes or zero incidents of having to brake aggressively and suddenly? this is like applying a set of standards that only a lame 80 year old person living in a town of 10 could possibly fulfill…it has nothing to do with reflecting the realities of driving on the road and the grey areas of context….pathetic…this will destroy freedoms in car and the mutually acceptable unwritten rules of road we have civilly developed as adults (i.e. if the flow of traffic on a 100km highway is at 120km then thats how you drive—technically over the speed limit but no cop stops people for this unless a near empty highway…)…there is absolutely no upside to this system and it is a ruse to ruin consumers and citizen rights…

  2. Robert Gillespie June 16, 2019 at 6:30 am - Reply

    Wuy dont Toronto drivers slow down and care about pedestrians biking and other means of traffic I live in the parliament and Gerrard dtivers drive way too fast they dont dtop for stop signs or even red lights 80 present of drivers shouldn’t be driving .slow down and obey the rules of the road if every one did this we would have a lot less accident s.

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