Usage Based Auto Insurance Coverage

According to an article in Canadian Insurance Magazine, Aviva has started offering usage based insurance (UBI) products in Canada. At the moment there are only a few insurers in North America offering this protection. Besides Aviva you can also find some form of pay-as-you-go car insurance from Safeco, General Motors, Progressive, Travelers, and American Family but only in the United States. These insurance providers all have low mileage discounts or various monitored driving programs that restrict the amount you are able to drive, or only charge you for the amount that you do drive.

Although the article on the Canadian Insurance Magazine website suggests that Aviva offers a usage based insurance coverage, we could not find any further information from Aviva. To find out more you should contact Aviva Canada directly by calling 1-800-387-4518. They will have a better idea of the type of pay-as-you-go insurance products provided by their company. It could be that one of their subsidiary companies is offering this type of insurance.

The Progressive Snapshot Discount

In the United States, the company that is at the forefront of the Pay-As-You-Drive (PAYD) revolution is Progressive Insurance. They have an insurance coverage and proprietary device called Snapshot, which is a small device you plug into your car. This usage based insurance coverage allows you to save money if you are a good driver. According to a video on the Progressive website, Snapshot only cares about how hard you break, when you’re on the road, and the miles you drive. Apparently your speed and where you are driving will not factor into your premiums. The Snapshot program will not punish you for what it might consider bad driving. The device will only save you money and it can save you up to 30% if your driving patterns are up to par. Progressive’s usage based insurance is not available in Canada and in some US states.

Privacy Concerns

There have been concerns about the “Big Brother” effect of tracking your mileage and driving habits. These UBI devices have been optional up until now so this criticism has not gained much traction yet. If usage based car coverage becomes more popular in the coming years then you can expect these concerns to be raised again.

Better Claims Reporting

One advantage of this pay-as-you-go model is that these UBI devices will be able to help fight claims fraud. Because the devices record your speed, the time of day, and your driving actions they will be able to help insurance companies deal with claims. If a collision occurs at a very slow speed then a fraudulent whiplash claim will be quite apparent if the UBI device is tracking the speed of the car.

The Future of Usage Based Car Insurance

Pay-as-you-go auto insurance hasn’t caught on quite yet. To start with, the technology has been too expensive until recent years. The cost of hardware and data transmission needed to track your driving habits has gone down significantly. Auto insurance is a competitive industry so the cost of installing these devices has not made sense up until now. Another thing that has kept UBI from becoming more popular is the fact that installation of these devices has been difficult and people are often changing vehicles. With older vehicles, there is no way to install the device that goes into your car’s on-board diagnostic port.

The future of pay-as-you-drive insurance is uncertain but with the popularity of companies like Zipcar and the early adoption of UBI devices, like we’ve seen with Progressive Insurance, you can only expect to see more of this technology in our daily lives in the future.