What is telematics insurance? How does telematics work?

What is telematics insurance? How does telematics work?

Telematics is just a fancy term that combines the words “telecommunications” and “infomatics”. But we won’t bore you with that. How does it relate to you and your car insurance?

Some insurance companies are starting to adopt what’s called “usage based insurance” (or “UBI” for short) using telematics technology.

How does usage based insurance (UBI) work?

In a nutshell, you can receive discounts of up to 30% on your car insurance based on how you drive. Before everyone had smart phones, driving data was collected through a telematics device plugged into a port in your vehicle. Companies have now switched to mobile apps on your smartphone to monitor your driving habits, which generate a personalized discount based on the results.

What type of data is collected?

Sure, you might not want insurance companies to know more about you than they already do. But rest assured, only very basic data related to your driving is collected. The main components are:

1. Hard braking
2. Fast acceleration
3. Distracted driving
4. Time of day you are driving

This information is compiled over approximately 6 months, and a discount is applied to your next insurance policy renewal based on the results. You can also track your own data to see where you might be able to improve your driving habits to bump up that discount!

The other thing that’s important to note is that insurance companies are not able to use the information to increase your price – they are only allowed to apply discounts based on the information collected.

How does telematics work?

If you decide to give usage based insurance a go, you enrol in a telematics program and provide your insurance company with an e-mail address and phone number for each participating driver. You’ll each be sent a link to download and install the app – and voila! Once installed, your trips will be automatically recorded and you can view your progress anytime. The app uses very little battery (3-6% per day) and not much data (30-60MB per month).

How do I get my discount?

Just for enrolling in the program, you will receive a discount of 10-15% (depending on the insurance company) right away. The data collection period is approximately 6 months, and the discount generated by your driving habits will be applied at your next policy renewal.

Usage based insurance discounts can be up to 30% of your total policy premium! Note that the discount generated by the technology will replace the enrolment discount, not be added on top of it.

Cheep Tip: If you receive your enrollment discount and do not download or use the app to track your driving, the discount will be removed and the savings will be added back to your premium, causing your price to increase.

Usage based insurance with Intact and Pembridge.

So far, two of the major national insurance companies have adopted telematics, or usage based insurance, in Canada: Intact and Pembridge. (For those of you insured with other companies, worry not, the trend of user based insurance is spreading!)

We’re provided some key points in Intact and Pembridge’s programs below:

Intact’s “my Drive” program:

• Enrollment discount: 10%
• Usage based insurance discount: up to 30% (depending on your driving habits)
• Not required on every vehicle in the household
• Must drive at least 1,000 kms during the data collection period
• After approximately 6 months, the enrollment discount is replaced with your personalized discount. If your personalized discount is less than the 10% enrollment discount, your price will increase.
• The program will continue to track your driving and update your personalized discount every 6 months, so you have more chances to hit the jackpot 30% discount!

Pembridge’s “My_BRIDGE” program:

• Enrollment discount: 15%
• Usage based insurance discount: up to 30% (depending on your driving habits)
• Not required on every vehicle in the household
• Minimum of 1 trip each 30 days and 50 trips during the 6 month data collection period
• Discount is applied to the renewal following the data collection period and will never cause an increase in your price
• No ongoing data collection; single data collection period and earned discount is maintained going forward

If you are insured with Intact or Pembridge and have questions about telematics or usage based insurance, contact your broker for more information on how to enroll!

If you’re interested in setting up a usage based insurance policy and want to see if you’re eligible, give our friendly team a call at 1-866-92-CHEEP (1-866-922-4337) or request a car insurance quote through our website.