CAA says more Ontario members turning to pay-as-you-go car insurance during pandemic

A non-profit travel organization has seen a spike in the number of members using its pay-as-you-go car insurance, especially over the past few months.

Jeff Walker, CEO for North and East Ontario, says the Canadian Automobile Association (CAA) launched MyPace insurance last year, only in Ontario. It will soon be available in Atlantic Canada.

"The premise really is that instead of paying a fixed monthly fee for your car insurance that you actually pay literally by the number of kilometres you drive, so really for those people who are low kilometre drivers they could save a fair bit of money," he said.

The insurance is meant for those who drive their vehicle fewer than 9,000 kilometres a year. The company says it is ideal for retirees, public transit users who leave the car at home, and others who live a low-mileage lifestyle.

A USB plugs into a USB port in the vehicle and keeps track of kilometres driven. The user starts with a base rate and their first 1,000 kilometres and are then charged for every 1,000 kilometre increment after that. 

"We could see that there was a huge number of people who were retired or working part-time — we'd just see these changes in patterns of driving," Walker said.

"We've obviously got some people that drive a ton, but lots of people that have a car but just don't drive that much. And it's not really fair for somebody that drives 40,000 kilometres a year to pay the same as somebody that drives 5,000."

Walker says if a driver under this type of insurance coverage was involved in a collision, the claims system works the exact same way as conventional insurance.

"It's really no different, it's just a different category of product, really."

The same goes for qualifying for the insurance. CAA says the process would be similar to that as from any insurance company, where they could review a driver's history as part of a quote. A driving record would  include previous collisions, how long someone has been licensed, speeding tickets, impaired driving convictions, etc.

Pandemic has people driving less 

Because the COVID-19 pandemic has caused a changing workplace dynamic, and forced a lot of people to stay at home, Walker says CAA has seen a big increase in users switching over to this usage-based insurance.

He estimates that increase to be around 50 per cent month-over-month, for the past three months.

"Actually people who are two car households — you'd say it's a two-income household — in the COVID environment, one or maybe even both of the people aren't necessarily driving, maybe one of them or both of them are working at home." 

"You could theoretically have regular insurance on one car and go to the MyPace product on another car."

"It's a no-brainer for a lot of people."

As far as he knows, Walker doesn't think any other insurance company offers usage-based insurance.

"When you're publicly traded and you're going out to the market and going 'We think we'll take less money from people for their insurance' stockholders might not love that as much," he said of conventional insurance companies.

"[CAA isn't] publicly traded in that way, so we can do things that are a little bit more long term and creative."