Is usage-based insurance right for you?

Usage-Based Insurance App

Wireless technology has drastically changed the way we live and now it’s changing the way we drive and, in turn, pay for car insurance. Usage-based insurance programs (UBI) have grown in popularity over the last few years and are transforming the auto insurance landscape. Not only do these programs enable more personalised discounts for drivers but they can also facilitate safer and more efficient transportation thanks to the flow of real-time data.

So, how do UBI programs work?

UBI is powered by telematics technology (measuring speed and movement) that transmits data to your insurance provider and back to you. In most cases, as long as you have a smartphone and data plan, you can download your insurance provider’s UBI app at no charge through the App Store or Google Play, with the help of your agent or broker. You will then have a monitoring period of anywhere from three to six months, where you’ll be rewarded for driving behaviours, such as driving at safer speeds, driving at safer times of the day, and minimizing frequency of hard stops. Once the monitoring period is complete, you’ll receive an earned discount that will be applied to your premium at renewal.

Learn more about Allstate's Drivewise app

UBI could teach you (or your teen) to be a safer driver!

With the ability to review trips and driving events in succession, the hope is that drivers will also start to gain awareness as to where they exhibit certain – not-so-safe – driving behaviours, which in turn will encourage them to improve and become better and more conscientious drivers. This tool can also be useful for households with new or teen drivers, to help coach them on unsafe patterns before they become habits.

As straightforward as the process may seem, there are still a number of questions around how telematics programs work. To help clarify, we chatted with our in-house Director of Product Development and Connected Consumer at Allstate, Glen King, to address some of the questions we hear most frequently.

Will usage-based insurance make my premium go up?

The short and long of the answer is no. Usage-based insurance was designed to give drivers the opportunity to take back the wheel. Participants in the Drivewise program will not experience an increase in their premium as a result of participating in the program. The only thing that may change is that you could lose any initial “sign-up” discount some providers offer during the monitoring process.

On the plus side, you could receive a discount up to 30% off your premiums!

Will my UBI app track me and know where I am at all times?

This is one of the most common concerns. At Allstate we do not use your location for anything other than to provide you with the information you may need to improve your driving. When it comes to speeding or hard braking events, location is not a factor in determining your earned discount, however we understand that in order to change your driving behaviours, it’s important for you to be aware of where these events are occurring. By being able to see where you’ve driven, and which habits you’ve exhibited where, our hope is that you’ll be able to modify your driving behaviours.

If you need additional reassurance, know that in Canada we are governed by legislation that prohibits where you drive from becoming part of the conversation when it comes to rates. Taking it one-step further, government policies fully state that we cannot use your data in claims-related processes. For example, if a collision occurs, and goes unreported, we are not permitted to use that information.

Will the app drain my battery life and data?

UBI apps do require a working data plan, but in terms of usage, it depends how far and how often you drive every day. For example, with Allstate Canada’s Drivewise® app, if you commute an average of 30km per day, you would use approximately 3mb of data, which translates into 90mb of data per month. That’s approximately the equivalent of:

  • Sending and receiving 100 texts/emails, with attachments
  • Browsing the web for four hours, without downloading pictures or videos
  • Using Waze or Google Maps for one hour
  • Streaming music for almost an hour and a half

Also, once you’re done driving, the location service turns off, which will minimize your battery consumption as well.

How do I know if I’m a good candidate for UBI?

Deciding whether to enrol in a UBI program is a personal decision and may not be the right choice for everyone. Insurance companies offer different types of programs and it’s important to consider your lifestyle and ask questions before signing on. A couple factors to keep in mind are:

  • Do you have a smartphone and data plan?
  • Are you interested in better understanding your driving behaviours and how to improve them?

Telematics has come along way in a short amount of time. The potential for these apps is unlimited, though most would argue the most attractive feature will always be that you, as the driver, have the ability to influence your premiums. However, as these apps continue to evolve our hope is that customers will come for the discount and stay for the convenient features that we are likely to see included as time goes on.

Drivewise Phone Handling Feature

One way that might help Allstate customers become more aware of their habits behind the wheel is a Phone Handling feature in the company’s Drivewise app for iOS and Android phones.

The feature can provide app users with insights into their driving habits to help inform them of any distracted driving tendencies. The app will record when a user locks or unlocks their phone, scrolls, types, and accepts incoming or makes outgoing calls. The feature will provide users with a summary of events to help identify distracted driving habits that they may not be fully aware are happening, which in turn, can help encourage them to improve their driving habits.

This feature will not affect a user’s Drivewise discount.

Still not sure? Take a peek at this testimonial from Thanh at Love and Sundays, and check out a few of her safe driving tips here!

This information has been provided for your convenience only and should not be construed as providing legal or insurance advice.

*Drivewise® app is optional. Subject to terms, conditions and availability. Your savings may vary. Savings apply to major coverages only. Trademark owned by Allstate Insurance Company used under licence by Allstate Insurance Company of Canada. ©2021 Allstate Insurance Company of Canada.