What is Pay-As-You-Go Car Insurance?
In 2018, the Canadian Automobile Association (CAA) created the MyPace program, which is designed for those who drive less than 9,000 kilometres per year. Starting in 2022, the limit will increase to 12,000 kilometres per year. The CAA claims that those who drive less than 1,000 kilometres per year could save up to 70% on their vehicle insurance premiums each year. Let’s take a closer look at how the program works and who might see the most benefit from it.
How Does the MyPace Program Work?
Those who enrol in this plan will be charged a base rate for the first 1,000 kilometres that they drive. After they breach that threshold, they will be charged for another 1,000 kilometres. This process continues until reaching the cap for the year, and at that point, motorists who are enrolled in MyPace will be switched to a traditional plan.
An app keeps track of how far a person has travelled in a given year, and it will send a text message each time he or she is getting close to the next rate tier. If a person doesn’t have a smartphone, a device will be connected directly to his or her vehicle to keep track of how many kilometres it has travelled.
The App Only Keeps Track of Driving Distances
It’s important to note that the MyPace app only keeps track of how far your vehicle has travelled in a given year. It will not keep track of other information such as how fast you drive, how hard you brake or other information that might impact your overall rate.
Who Might Benefit From Such a Program?
It’s not uncommon for those who live in Toronto to take public transit to work each day. If this is what you do, you may only need a car to get to the grocery store or to visit friends or family members in nearby towns over the weekend. In such a scenario, it may not make sense to buy a traditional insurance policy in Toronto as it may not provide the most value for your money.
If you work at home, it may be a good idea to buy an insurance policy that charges you based on how many miles you drive. This is because your daily commute may not be longer than the distance from your bedroom to the home office down the hall.
Finally, it may be in your best interest to enrol in such a program if you simply don’t drive unless you absolutely have to. These days, it’s not unheard of for people to have their groceries, electronics or other purchases delivered right to their door. In fact, you may even be able to buy a vehicle or have it repaired without the need to visit a dealership or auto body shop.
If you tend to only drive when absolutely necessary, it likely doesn’t make sense to have a traditional auto insurance policy. Instead, it’s generally a better idea to only pay for the amount of coverage that you need to adhere to provincial law.
Rental Cars Also Require Insurance
Some people will try to keep their transportation costs down by simply renting a car on the rare occasion that they need to drive somewhere. However, it’s worth noting that you’ll need to buy insurance when operating a rental vehicle. Ultimately, rental fees, insurance costs and other fees might actually make it more expensive to rent a car as opposed to buying one. This may be true even after factoring in a car payment, insurance and other costs of ownership.
This Program Is Available Outside of Ontario
In addition to the province of Ontario, the MyPace program is available in New Brunswick, Nova Scotia and Prince Edward Island. Therefore, you may have an effective way to keep your auto insurance rates down if you split time between Toronto and locations in these other provinces throughout the year.
If you are looking for a way to acquire insurance without paying too much, it may be a good idea to consider the MyPace program. If you drive less than 12,000 kilometres per year, it may provide you with an opportunity to adhere to provincial law without inflating your car’s overall cost of ownership.