Ontario motorists who log less than 9,000 kilometres a year can save on their auto insurance premiums under a “pay as you go” program billed as the first of its kind in Canada.

Called MyPace and offered by CAA Insurance as an option for customers in the province starting in July, the program lets motorists monitor how much they drive and pay for insurance based on that mileage.

“We believe that insurance options should be designed based on individual lifestyles and the various stages of people’s lives,” CAA Insurance president Matthew Turack said Wednesday at Toronto’s Union Station.

“People should be able to access the insurance they need, when they need it, at a price and payment schedule that works for them.”

The program uses a device plugged into the vehicle that connects to a mobile app or web portal used to track data on kilometres driven, time and distance of the trip. The program is distinct from insurance offerings that monitor variables such as the speed of the car and braking patterns that can be used to gauge personal driving habits as a factor in premium rate calculations.

“What is unique about this program is it’s based only on mileage,” said Steve Kee, a spokesperson the Insurance Bureau of Canada, the national industry association. He called it a welcome layer of choice for drivers amid a spike in pump prices and in a province where drivers pay the highest auto insurance rates in Canada, according to a report for the province’s Liberal government last year.

“Auto insurance has been front of mind for a lot of Ontarians,” said Elliott Silverstein, manager, government relations, CAA South Central Ontario. “For those who are low-mileage drivers (this) marks an important step in the modernization of insurance in Ontario.”

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Drivers who choose to enrol in MyPace will have kilometres loaded automatically in 1,000-kilometre increments and receive a notification to let them know when they are close to the end of an increment. If the annual cap is exceeded, the customer’s underlying insurance premium rate applies to the additional kilometres.

Turack said premiums for CAA MyPace are calculated in the same way as any other insurance policy.

“The product itself isn’t different — it’s how it is paid for by the consumer that is different,” said Turack. “Insurance rates always vary and are typically based on a driver’s past driving history, driving experience and claims history.

“Because of this variability, it is not possible to provide an example rate for a hypothetical driver.”

There is no discount for signing up, and CAA MyPace doesn’t offer discounts to consumers, Turack added. “It simply gives low-mileage drivers an option to pay as they go, which if they drive less than 9,000 km, will be less than their traditional policy.”

Turack said the program has been approved by the auto insurance regulator — the Financial Services Commission of Ontario — which has said that it is open to pay-as-you-drive so long as companies are fully transparent on how data is collected and how the data translates into a specific discount.

Turack said he expects the program will be popular among seniors and public transit commuters, and could ultimately be expanded to the Atlantic provinces.

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Mileage-based insurance policies first appeared in the U.K. and have been piloted in the U.S., where insurers tout the approach as a more accurate way to price consumers’ auto insurance risks and as a means to encourage motorists to drive less to reduce greenhouse gas emissions.

The mileage discount concept was spearheaded in the U.S. by Progressive and National General Insurance, with National and vehicle safety system OnStar teaming up to offer a low-mileage discount for eligible active OnStar subscribers who opt in. There’s no penalty for driving more than the 15,000-mile cap under the program and motorists can get an insurance discount for having an active OnStar subscription.

In Canada, Aviva ended a five-year pay-as-you-drive pilot in 2010, citing high support costs for the cancellation, but CAA, an affiliate of the CAA roadside assistance service, says costs have come down since then while consumers have grown more willing to embrace usage-based billing.