New Rules for Usage-Based Auto Insurance in Ontario

Will changes bring about more auto insurance options to Ontario’s drivers?

The price of Ontario auto insurance has always vexed drivers in the province. A recent report estimates the average price of auto insurance in Ontario to be $1,616 per year. Premiums are even more expensive if you live in Toronto or the cities that make up the Greater Toronto or Hamilton Areas.

Some drivers in the province have looked to keep their premiums in check with usage-based insurance (UBI). It is an insurance policy that marries some of the traditional ways car insurance rates are determined with technology that gives more insight into how and when you drive. It’s supposed to help lower premiums through discounts for good driving. There’s also the added perk the information cannot be used to increase rates if it’s found the driver’s time and behaviour behind the wheel is less than favourable.

On this latter point, those days could be coming to an end.

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FSRA takes another look at its UBI regulations

The Financial Services Regulatory Authority of Ontario (FSRA), the folks who oversee auto insurance in the province, have made changes that could effectively allow insurers to reward or penalize drivers enrolled in a UBI program. Until recently, only rewards (i.e. discounts) were permitted to encourage good driving habits; now, penalties (i.e. surcharges) are an option as well.

According to FSRA, the changes make way for more competition in the area.

“Many Ontario drivers have significantly changed their driving behaviour as a result of COVID-19. FSRA is working to make it possible for auto insurers to provide options for their customers”, said FSRA’s Tim Bzowey, Executive Vice President, Auto/insurance Products. “We need to be responsive to the evolving needs of drivers, and removing regulatory barriers for usage-based insurance is one example.”

With these barriers removed, presumably, the UBI offering in Ontario can advance on the insurer’s side and perhaps appeal to a broader audience on the consumer side.

Already enrolled in a UBI program?

The change in rules does not affect existing UBI programs or policies, says FSRA. If you’re already enrolled in a UBI program, you’ll be unaffected. However, should your provider decide to change their UBI pricing model at a later date, they’ll have to go through FSRA first for review and approval. The same is true for new UBI programs.

If you’re toying with the idea of joining a UBI program – it is still a great way for good drivers to spend less on their coverage, after all – one of the key questions all drivers should ask before signing up will be: Is it possible my driving data could be used to increase my rates?

What is UBI exactly?

There are two types of UBI programs available in Canada: pay-as-you-go and pay-how-you-drive.

Pay-as-you-go relies heavily on the distance you drive. It starts with a set premium for coverage followed by a fee for distances as they are travelled. You top up your account, so to speak, as you only pay for the kilometres you drive.

Pay-how-you-drive also starts with a set premium, but over a year, a driver’s behaviour behind the wheel is monitored. It focuses on driver traits like speed, braking, acceleration, distance travelled, and the time of day. Until FSRA’s recent changes, this information was used to offer discounts at renewal.

Each insurance program offers drivers the opportunity to pay less for car insurance and includes enrollment discounts ranging from 5% to 10%.

Yea or nay to UBI: Find your lowest rate at

UBI programs are not for everyone. Even good drivers, who it should benefit most, are not always ready to embrace it no matter what the savings could be. Whether you’re ready for UBI or not, you could be spending less on your coverage. Find the cheapest car insurance rates today by comparing quotes from 30+ providers in a single search.