It won’t be long before your teenager asks to borrow your car. But, before they get behind the wheel, a conversation about teen insurance needs to occur. So many questions come up when it comes to adding a teenager to your insurance policy. Should they be a casual driver? Should they get their own policy? When should you add them to your policy? Driving is a pretty big step for teens as it gives them newfound freedom they did not previously have. However, with this new privilege comes new responsibilities. Let’s discuss teen insurance and when is the best time to add them to your auto policy.
Start with quotes
You should first contact isure to get an auto insurance quote when considering adding your teenager to your policy. You should also get a quote for their own teen insurance policy separate from yours. While it is less expensive to add another driver to your policy, it’s good to have an individual quote as well. If you want them on their own policy with their own car, there are certain things you can do to reduce the cost. For example, having them drive one of the safest cars on the road and providing them with the opportunity to go to driving school will certainly save you money. In addition, if they have been driving well, you can look into our telematics insurance policies that reward great driving.
What is the minimum age for driving in Ontario?
When your teen obtains their G1 (learner’s permit), you should contact your insurance company to let them know. In some cases, you can add them to your policy as an occasional driver for free because they will not be driving alone or often. However, once they acquire their G2 licence and may be driving alone, they absolutely need to be added to your insurance policy. The sticker shock of adding a teen to your insurance may be tough, but the reality is they NEED coverage to drive legally in Ontario. So, please do not take a risk when it comes to auto insurance and your teenager.
According to the Ontario.ca website, residents of Ontario must be at least 16 years old and have a valid Ontario driver’s licence to drive in this province. Visitors to Ontario who want to drive while here must be at least 16 years old and have a valid driver’s licence from your own province, state or country. To apply for a G1 licence, you must be at least 16 years old and pass an eye and written test about the rules of the road and traffic signs.
What is the difference between primary and secondary drivers?
You may be wondering if the amount of time your teen drives is considered when calculating premiums, or if it has to do with their annual mileage driving the car. In general, your auto insurance providers will look at the amount of time that your teen drives a car to determine if they are a full-time or part-time driver. As a member of your household, insurers will also take into account how many cars there are in the house compared to drivers. If your children live at home and will drive your car, even occasionally, your insurance company will consider them “occasional drivers.” You will need to add them as secondary drivers on your auto insurance policy to ensure they have the proper coverage.
Primary and secondary (occasional) driver refers more to the driver’s status on the policy. Both primary and secondary drivers will receive the same coverage in the policy. Defining the driver designations on your policy is about the amount of the premium paid. Primary drivers are examined more closely by insurers when determining rates.
Normally, anyone with a driver’s licence in a household needs to be on the auto insurance policy. Anyone else who will be operating your vehicle on a regular basis should be added, regardless of whether they live with you – including your teen. They will also be named secondary drivers on your policy. Typically, they are driving your vehicle once per week or less than 50% of the time.
Fronting is the act of naming your child as a secondary driver on your policy when in reality, your child is the one using the vehicle the most. Many parents do this thinking that it will help their child save on insurance, but car insurance fronting is against the law in Ontario. Car fronting is illegal and a form of insurance fraud.
When to add your child to your car insurance policy
You need not add your child to your car insurance policy in Canada until they have been licensed to drive and are driving on their own. Most Canadian insurance companies do not require you to include a teen who is still using a G1 and can only drive with an adult in the car for learning purposes. They will have coverage through your policy should something happen. Once they advance in your province’s graduated licensing program and can drive without a supervising adult, you will then need to add them as an occasional driver to your car insurance policy.
Ontario is the second most expensive province when it comes to car insurance. A breakdown of auto insurance in Ontario is as follows:
- The average auto insurance policy in Ontario is over $1,500 a year
- Drivers 16-19 years old pay the most for auto insurance, with an average yearly premium of $8,371
Factors determining teen insurance premiums
Car insurance for young drivers is significantly more than the cost for drivers 25 years of age and over. Young drivers can pay five times more than the average rate. This is hundreds, or even thousands, more in premiums per year. But there are dozens of factors insurers consider. There are several variables that go into calculating car insurance quotes for new drivers.
Here are a few factors taken into consideration when calculating your teen’s premium:
- Their driving record
- How frequently they use the car
- Location
- Age
- Gender
- Type of car
- Credit history
- Type of coverage you need
In Canada, a newly-licensed driver is known as a new driver or a first-time driver. For some car insurance companies, drivers are “new” until they have at least three years of driving experience; for others, it can take up to five, or even nine, years.
Use parental powers when it comes to teen insurance
One of the best gifts you can give your teen driver is to teach them how to be a safe driver. This means both leading by example and providing them with the opportunity to go to driving school. Driving is not a right, but a privilege. As a parent, this gives you significant power and influence on your teenager. In exchange for this new freedom, you can set specific requirements:
- Setting a proper curfew
- Keeping a certain grade point average
- Have your teenager pay for a portion (or all) of the increase in cost
- Usage-based insurance (UBI) driving apps
When a young driver completes a government-approved driving program, they can save anywhere from 10-25% on insurance premiums. Just provide your insurer with proof that you completed the course.
(UBI) or Telematics
Utilizing a driving app with your teen is one of the best ways to teach your teen to practice good driving habits. It monitors braking, acceleration and kilometres driven. It’s the most cost-effective product for young drivers to save and allows you to build your driving and insurance history.
Some other benefits of using UBI are:
- Cheaper insurance for good, low-risk drivers. Drivers are able to receive a premium discount of up to 25% by meeting behavioural incentives to reduce their kilometres driven and drive more carefully.
- The discount incentives encourage safe driving and reduce crashes
- Insurers use your telematics data to ensure claim accuracy and reduce fraud by analyzing driving information at the time of a crash
- In some cases, insurers can also track your car if it is stolen using telematics system GPS.
- Gives you insights to improve your personal driving habit. Therefore, young and new drivers receive feedback to assist them to develop safer driving habits. For seasoned drivers, the feedback can offer tips for better mileage and proper car maintenance.
To learn more about telematics insurance, please click here.
If your teenager is ready to drive, you should immediately insure them. While your premiums will certainly go up (teen drivers are the most expensive to insure), having the peace of mind that they are covered will help you sleep better at night. Consider getting a safe car to save a bit of money on insurance. Additionally, have an ongoing dialogue with your teen about their driving, their responsibilities, and the cost of insuring them. It’s an important step in their development, and also yours as a parent. If you have more questions about setting up a new driver on your policy or driving school discounts, make sure to contact a member of our team.
