Whether you’re buying a car or borrowing parents’ vehicles, you need an affordable auto insurance policy with the right coverage. Finding affordable insurance is often a challenge, since new drivers typically pay the highest car insurance premiums. The good news is we have helpful tips for new drivers on finding car insurance. In this article, we look at 15 ways new drivers can save on auto insurance.
Why are rates so high for new drivers?
There are a few reasons why auto insurance premiums are so expensive for new drivers. The main one being that young drivers with inexperience are more likely to get in an accident and make a claim. Insurance companies base their prices on the level of risk each customer presents. Therefore, premiums will be different for every driver.
How much does car insurance cost for a new driver?
Ontario is the second most expensive province when it comes to car insurance. Driving up and down the 401 doesn’t come cheap; the average auto insurance policy in Ontario is over $1,500 a year. The city with the most expensive auto insurance in the province is now Vaughan, with an estimated annual premium of $2,179. Millennial drivers, ages 16-33 years old pay the most for auto insurance, as their average yearly premium of $2,899.30. This is comparable to Gen X drivers (ages 34-51 years old) who pay $2,289.00, and Boomers (ages 52-70 years old), who pay $1,999.08. In Canada, a newly-licensed driver is known 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.
What is the average cost of insurance for new drivers in Ontario?
Insurance companies base their rates on multiple risk factors, and one of these is the likelihood of the driver getting into an accident. While young drivers comprise less than 10% of drivers in Canada, sadly, they account for a quarter of all accidents that result in serious injury or death. As a result, if you are between the ages of 16 and 24, you are considered a “high-risk” driver. Generally speaking, new drivers are under the age of 25. Since, historically, this demographic is the most likely to suffer collisions, insuring them is more expensive. In Ontario, the province with some of the costliest insurance rates in Canada, the minimum rate that new drivers will pay for insurance is approximately $3,751.
Factors that contribute to the cost of insurance
There are many factors that contribute to the cost of insurance. Here are some of the key considerations when calculating premiums for auto insurance:
- Type of car that you drive: New cars can be safer, but more expensive to insure, as older cars pose higher risks due to the lack of safety features.
- Your age, gender, and level of experience.
- Where you live: Urban areas tend to be more expensive due to congestion and higher theft rates.
- Driving experience in a relevant country: Unfortunately, many insurance companies do not count driving experience if it was earned in a country not among a select few.
As a new driver, you should be aware that it is mandatory in Ontario to have the following coverage on your auto policy:
- Minimum of $200,000 Third-Party Liability (TPL) insurance to protect you in case someone suffers injuries or property damages by you.
- Statutory Accident Benefits coverage for your own personal injuries following an accident, regardless of fault.
- Direct Compensation – Property Damage coverage (DC-PD) covers damage to your vehicle or its contents in an accident.
Do I need my own insurance policy?
If you plan to share a vehicle with another driver (like a parent, for example) and only drive occasionally, you can get secondary driver insurance, also known as occasional driver insurance. Secondary driver insurance is an affordable option, because you don’t have your own policy. Rather, you are added to the main driver’s policy, and that person pays a higher premium. If you’re unsure of what constitutes a “secondary driver,” ask your insurer. Failing to abide by the rules of your policy could render your coverage void.
15 ways for new drivers to save on auto insurance
Here are some ways that you can help reduce insurance premiums as a new driver:
Once you have you insurance, here are some other ways to save even more:
For the reasons described above, there’s no simple answer to the question, “How much is insurance for a new driver?” Doing your research and utilizing our 15 ways to save on auto insurance, new drivers can find the lowest possible premiums that can fit their budget.