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Is Pay-As-You-Go Insurance Cheaper Than Regular Insurance?

CAA brought a new insurance product called CAA MyPace to the market last year. The idea behind it is to only charge drivers for the portion of insurance they actually use, mostly for drivers that don’t rack up many kilometres per year. It’s nice to see some auto insurers actually taking steps to innovate and make car insurance cheaper, especially since Ontarians have been overpaying for car insurance for years. Let’s see if CAA’s new offering actually will save you money, or if it’s just a marketing gimmick.


What is MyPace?

MyPace is a way of paying as you go for insurance, rather than a flat monthly or annual fee. It works sort of like a car lease does – you are only allowed to run up a certain number of kilometres per year, and after that you get hit with extra fees. No big deal if you commute within your city and don’t take too many road trips, but going over will cost you.

The same applies to MyPace, but instead of the average 25,000km allowance for a lease, MyPace is limited to 9000 km a year. After hitting 9000 km, you won’t have to stop driving, but you will have to pay the normal rate written in your policy.

MyPace does not really offer a discount over a traditional CAA insurance policy. Rather, it allows occasional drivers to only pay for the portion of the policy they use. This can save you money so long as you are under the limit, and the more you’re under, the more you’ll save.


What are the discounts?

The less you drive, the larger a discount you’ll get when using MyPace compared to a normal insurance policy. Once you reach 9,000 annual kilometres, CAA actually tells you themselves that there’s no savings to be had, so props to them for transparency.

The max discount of 70% kicks in when you drive 1,000 km or less per year – that’s less than 20 km per week! So while the savings are high (a 70% discount on the average Ontario car insurance policy would save $1,344 every year!) most people won’t qualify for such a deep discount.

For switching to MyPace to be really worth it, you’d have to keep your mileage to 7,000 km or less. That would net you a nice 15% discount, which would save $288 per year on the average Ontario policy.


Not for everyone

Since the cap is only 9000 km, many people will see no savings at all if they were to switch. A daily commute of just 36 km (18 km one way) will see you at 9000 km per year, and that’s before taking any additional driving into account.

My commute is only 28 km a day, but I frequently go on day trips or longer road trips that shoot my mileage skyward. Even going to the grocery store or dropping your kids off at school can rack up a lot of miles.

Unfortunately, MyPace sounded like a great deal – only pay for what you use! – but not many Canadians will be able to take advantage of the savings.


What else can I do to save money?

One option you have is to go with a company that offers a tracking device which scores your driving. The better your score, the higher discount you’ll get if you stick with the same company and renew once your current policy is over.

The best part about these programs is that they offer an instant discount (say 5 or 10%) just for enrolling, and they cannot be used to increase your premiums. Even if you don’t receive a discount, you won’t be forced to pay more.

The traditional way to lower your premium is patience (and good driving habits). You can see our guide to lowering your car insurance payments here. Of course, the best way to get lower premiums is to compare car insurance policies online, so you can see exactly what kind of deal you can get.



Chris Chris 06/04/2019
Canadian personal finance buff and all-around writing enthusiast, Chris loves breaking down complicated money ideas to show that they're really not so complex. 
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