Pay As You Go Auto Insurance Introduced In Ontario

Ontario motorists who log less than 9,000 kilometres a year can save on their auto insurance premiums under a “pay as you go” program that’s being called the first of its kind in Canada.

The program is being offered by CAA and is called “MyPace.” It’s being marketed as an insurance option for customers in Ontario starting in July of this year. Under the program, motorists monitor how much they drive and pay for insurance based on that mileage.

The program uses a device plugged into vehicles that connects to a mobile app or web portal used to track data on kilometres driven, time and distance of each trip. The program is distinct from insurance offerings that monitor variables such as the speed of the car and braking patterns that can be used to gauge personal driving habits as a factor in premium rate calculations.

Drivers who choose to enrol in the “MyPace” program will have kilometres loaded automatically in 1,000-kilometre increments and receive a notification to let them know when they are close to the end of an increment. If the annual cap is exceeded, the customer’s underlying insurance premium rate applies to the additional kilometres.

There is no discount for signing up, and CAA MyPace doesn’t offer discounts to consumers. It simply gives low-mileage drivers an option to pay as they go, which if they drive less than 9,000 km a year will be less than their traditional auto insurance policy.

Mileage-based insurance policies first appeared in the United Kingdom and have been piloted in the U.S., where insurers tout the approach as a more accurate way to price consumers’ auto insurance risks and as a means to encourage motorists to drive less and reduce greenhouse gas emissions.

In Canada, Aviva ended a five-year pay-as-you-drive pilot project in 2010, citing high support costs as the reason for the cancellation. But CAA says costs have come down since then while consumers have grown more willing to embrace usage-based billing platforms.