Providers in Ontario are eyeing these new telematics plans as the Canadian province seeks to lower premiums.
The government of the Canadian Province of Ontario has tasked the auto insurance industry with reducing rates by 15 percent, and they are now looking to usage based programs based on telematics to be able to achieve this goal.
That said, this type of plan is not necessarily designed to benefit people who commute every day in rush hour traffic.
Auto insurance companies are now seeking to speak with the financial services regulator in the province to obtain approval for rolling out the new usage based coverage policies that will allow low risk drivers to slash their rates and bring the overall rates in Ontario down by 15 percent. For drivers in the Greater Toronto Area (GTA), who have the highest premiums in the province, this is certain to be news that they welcome with open arms.
If usage based auto insurance is rolled out in a broad scale it will require sacrificing some privacy for lower prices.
Drivers who feel that they present a low risk to insurers and who want reduced auto insurance rates will exchange a bit of privacy regarding when and how they use their vehicles for this opportunity. The combined savings that could be experienced throughout the province following a 15 percent rate cut, next year, would be a tremendous one if the provincial government keeps up its end of the bargain.
Traditional forms of auto insurance are based on rewarding drivers for their past behavior. Motorists who don’t make claims and who live in lower risk locations while being a part of a demographic associated with fewer accidents, are assigned lower premiums. The difference is that usage based programs reward the driver’s current behavior through a wireless monitoring device that transmits to the insurer and then compares that data to a benchmark.
Some auto insurance companies are already offering this type of coverage in Canada but it is far from mainstream. If the devices are shown to the province as being potentially beneficial, it could mean significant reductions for drivers there.