CAA offering pay-as-you-go insurance for low mileage drivers

Pay-as-you-drive car insurance is coming to Ontario, offered by CAA, for low-mileage drivers who rack up less than 9,000 kilometres a year.

Drivers prepay for the first 1,000 kilometres plus a base rate

People who drive infrequently can now sign up for a pay-as-you-go program for auto insurance with CAA.

A new auto insurance policy for infrequent drivers is now available from the Canadian Automobile Association (CAA), letting drivers pay for every 1,000 kilometres they drive.

The program, named CAA MyPace, is aimed at those who drive less than 9,000 kilometres a year, because they pose "less risk on the road," says Matthew Turack, president of CAA Insurance.

"We see that low mileage drivers … deserve to pay less for their auto insurance premiums," he said.

This policy may work for those who only drive within their city. Thomas Lesperance, who switched over to driving an e-bike to save on gas and insurance, said he never drove that much.

"It sounds like something that Windsor needs, instead of paying so much for every year," he said.

The company first launched a "pre-sale" for this insurance policy and Turack said they saw a lot of demand.

Tracking the distance

To be part of the program, drivers have to install a device in their car that tracks the mileage and sends it to CAA. They will get billed for every 1,000 kilometres they pass. There's an initial base rate plus the first 1,000 kilometres that drivers prepay.

Doug Sabga, who commutes from Essex County to Windsor for work, wants to know how CAA would monitor who's actually racking up the mileage.

"Cause I could just let my wife always drive, and I never pay, even though I'm driving some of the time," he said.

The recommended 9,000 km maximum is also not that hard to reach, according to Sabga, "So you really have to be an occasional driver."

But it may be a policy that could work for his niece and nephew when they're old enough to drive.

This new policy does not extend to cover motorcycles. (Submitted by Michelle Christine)

'Modernizing' auto insurance

He said this type of payment policy is suited for those who may use a mix of transportation options, such as a person who may only drive to a transportation hub and transfer onto a city bus to go to work.

"This is our way of looking at modernizing the Ontario auto insurance programs," Turack said.

The CAA website says a driver could potentially save up to 30 per cent compared to getting a traditional premium policy if they drive 5,000 kilometres. However, once you get up to 9,000 kilometres, there is no difference in cost from a traditional policy.

"Once you've driven ... 9,000 kilometres, you've hit your traditional premium amount and essentially we don't charge you anything past that," Turack said.

For those who skirt around the edges of the 9,000 mark, the difference will be whether you prefer having scheduled auto insurance payments, or irregular payments as you hit each mark.

However, not everyone's vehicles will work.

The program is not available for motorcycles, vehicles manufactured in 1997 or earlier and electric and diesel vehicles manufactured in 2005 or earlier.

With files from Jonathan Pinto,,,,,,,,,,