Usage Based Insurance

What Is Usage Based Insurance?

Usage-based insurance (UBI), also referred to as pay how you drive or pay as you drive, is a type of automobile insurance which, depending on the specific insurer's program, measures how far a vehicle is driven, where it's driven, and/or how it's driven. In Alberta, (UBI) is a voluntary product offering drivers the opportunity to earn discounts or rewards based on safe driving behaviors (pay how you drive). UBI encourages safe driving behaviors by providing the driver with feedback based on driving data to reduce instances of unsafe driving (such as distracted driving) and the frequency and severity of accidents.

Insurers collect driving data through either an OBDII device or a mobile application. The driver's base automobile insurance rate may increase or decrease based of parameters such as:

  • Time of day
  • Location driven
  • Distance driven
  • Speed
  • Fast acceleration
  • Instances of hard braking
  • Mobile phone use

Albertans currently opting to participate in a UBI program and receive discounts on their automobile insurance see the benefits of UBI. Through consumer research, the AIRB has confirmed many Albertans are open to the idea of UBI as a way to pay a premium based on their driving behaviors. There is a limited number of insurers currently offering UBI in Alberta; but recent legislative changes have reduced barriers making it possible for more insurers to introduce these programs for Alberta drivers.

As with any product, consumers need to make an informed purchasing decision, as new insurers offer UBI in Alberta, some may introduce surcharges for unsafe driving behavior.

Privacy and Information on Data Collection

Some consumers may have concerns with privacy. It is true UBI programs collect data about your driving behavior and location, however all insurers and their UBI service providers are required to comply with Alberta's privacy laws. If you are concerned about the nature of data collected, how it is used, where it is stored, how to report inaccurate data, how to correct data or advise the app when you are a passenger or using public transportation, we encourage you to ask your insurance representative.

With UBI programs, the objective is to improve driving habits and reduce the frequency and severity of accidents, making Alberta's roads safer for all, while rewarding Albertans who practice safe driving habits.

Pay As You Drive

A second type of UBI program is known as pay as you drive. Under this program, a driver pays a set rate for coverage based on the vehicle's use. There may be an initial fee for coverage when the vehicle is not being driven and a separate fee applied based on a kilometer threshold.

Other Options to Lower Your Premiums

Enrolling in a UBI program may not be right for you. There are other ways you can lower your automobile insurance premiums. Refer to Factors that Affect Premiums for more information.

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