Telematics: Is It Worth It?

Car with telematics signal


Telematics technology, also known as user-based insurance, allows an insurer to customize a driver’s insurance premium based on their pattern of driving. It works by monitoring a driver’s behaviours behind the wheel to provide an objective picture of how they drive.

The technology assesses:

  • ​The distance driven
  • The time of day that the car is on the road (rush hour, mid-day, night), and
  • How the driver accelerates, brakes and makes turns.

Data is collected for each trip. A driver that exhibit better driving habits or improves their driving behaviour, can potentially save on insurance premiums. The average savings is about 10% but can be as high as 25%.

The CAA recently announced a different approach for telematics technology. Drivers will have the option to pay for their auto insurance in 1,000-kilometre increments. Customers will be charged a base rate, after which they’ll pay every time they hit a kilometre milestone, up to 9,000 kilometres. The CAA MyPace program will not monitor how hard a driver is braking, for example, and will only focus on tracking mileage.

How Does Telematics Work?

Telematics was first used in Canada by an auto insurer in 2013 and has since grown to include a number of insurers. There are two models out there.

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