Pay as You Go Insurance: What Is It & How Does It Work?
Everyone is different — we all have different styles, tastes and even driving habits.
Some drivers travel countless kilometres every year, while others spend an hour or two on the road each week. This is why car insurance companies offer a wide variety of products for different types of drivers — to meet their unique and specific needs.
One of the many unique forms of car insurance that Canadian drivers can purchase is pay as you go insurance.
Not familiar with this type of car insurance? That's ok!
Today's article will focus on the in's and out's of pay as you go car insurance, how it works, who can benefit from using it and more!
Continue reading to learn more about pay as you go car coverage in Canada.
What is pay as you go insurance?
Pay as you go coverage (also known as pay as you drive insurance) is a form of usage-based car insurance that can help Canadian drivers reduce their car insurance rates.
Pay as you go insurance tracks how much a policyholder drives and bases their potential discount on their level of usage.
This is quite different from other forms of usage-based car insurance, as they generally focus on how you drive, not how much you drive.
Pay as you drive car insurance — how does it work in Canada?
The rules around pay as you go coverage vary slightly from provider to provider. That being said, the basic principle is generally the same.
Drivers that want to purchase pay as you go insurance start by prepaying a daily premium based on their vehicle usage (additional fees often apply). Once the driver has prepaid their premium, they are given a baseline of 1,000 kilometres of driving distance.
Every time a driver exceeds the baseline amount by 1,000 kilometres, they receive a "charge". The charge negatively impacts the driver's rate discount. This is something drivers need to keep in mind if they are thinking about investing in pay as you drive car insurance in Canada.
All in all, if you have pay as you go insurance, the less you drive, the more you save on coverage!
How do insurance companies track vehicle usage if you have pay as you go car insurance?
Drivers are required to install a pay as you go device in their vehicle. When a driver operates a vehicle, the device automatically tracks the driving distance. This device allows car insurance companies to get the data that they need to calculate your discount.
Some pay as you go car insurance companies in Canada also offer a handy smartphone app. Drivers can download the app and track usage via a GPS device.
Please note that you cannot use a combination of these two options. Be sure to pick the option that works best for you.
How much can you save on insurance with pay as you go car coverage in Canada?
The level of savings you're eligible for depends on how many kilometres you drive per year. Drivers that stay within the baseline limit (generally 1,000 kilometres) can save up to 70% on their car insurance!
In contrast, drivers that hover near the kilometre limit (generally 12,000 kilometres) save roughly 2% on their coverage. That's a huge difference!
Who should get pay as you go car insurance in Canada?
Pay as you go insurance is an ideal option for drivers that spend a small amount of time on the road each year. As mentioned earlier, drivers that stay within the baseline limit are able to save as much as 70% on coverage.
However, if you drive more than 12,000 kilometres per year, pay as you go insurance may not be the ideal tool for saving on car insurance.
Do all cars qualify for pay as you go car insurance in Canada?
Unfortunately, no. Many pay as you go car insurance companies don't offer coverage options for the following types of vehicles:
- All models made before 1997
- Diesel models manufactured before 2005
- Electric car models
Can drivers get pay as you go car insurance in all Canadian provinces and territories?
No, pay as you go coverage isn't available in all provinces and territories. Currently, pay as you go coverage is available in the following locations:
- Prince Edward Island
- Nova Scotia
- New Brunswick
Thanks to pay as you go insurance Ontario, PEI, Nova Scotia and New Brunswick drivers are able to save a hefty amount on coverage.
Want to save on car insurance in Canada? Compare competitive quotes with Surex
Whether you're looking for your first car insurance policy or have been an insured driver for decades, finding and comparing insurance quotes can be quite challenging. Not to mention, spending time on the phone with multiple car insurance companies can be rather time-consuming.
If you're looking for an easier, faster way to compare insurance quotes, you should reach out to your Surex insurance advisor today.
At Surex, our advisors (our preferred title for insurance brokers) work hard to make it easy for Canadian drivers to find high-quality insurance at a fair price. We do this by leveraging our unique working relationships with Canada's top car insurance companies. In turn, we're able to offer quality quotes to drivers in Canada.
Feel free to give us a call or visit our website to receive up to ten quality quotes in ten minutes or (less!). The quantity of quotes varies from province to province.
Don't forget to ask your Surex insurance advisor about how you can save up to 25% when you bundle your policies with one of our insurance partners!
Do you have questions about pay as you go car insurance in Canada?
In principle, pay as you go coverage is relatively straightforward; the less that you drive, the more you can save. However, as you now know, there are a handful of nuances that not everyone is familiar with.
If you're curious about a specific aspect of pay as you go car insurance (or car insurance, in general), feel free to reach out to your Surex insurance advisor. We're always happy to answer your questions and help you find a solution to any insurance issues that you're facing.