Auto insurance deductibles
When it comes to auto insurance, a young driver is anyone under the age of 25.
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 percent of drivers in Canada, sadly they account for a quarter of all accidents that result in serious injury or death.
If you are between the ages of 16 and 24, you are considered a “high-risk” driver, and this means having to pay higher-than-average premiums. While there is nothing you can do about statistics (or your age), there are several ways you can keep the cost of car insurance down.
The easiest way to save is by comparing quotes from Canada’s top insurance companies. We list multiple rates in one place, so you can quickly find the best deal.
Here are 10 tips to help young drivers save on car insurance costs:
1. Build up your insurance history
As long as you maintain a clean driving record, more experience equals lower car insurance rates. Therefore, a 24-year-old who has been driving for seven years can expect cheaper insurance than a 24-year-old who has only been driving for six months.
With this in mind, become an occasional driver on you parents’ policy as soon as possible. You will save money (there is no additional charge for G1 drivers attached to a parental policy), while building up valuable experience.
Each province has its own licensing rules, but you should aim to work through the graduated system as quickly as possible to maximize the time you have held a full licence. In a few years when you are ready to buy your own car, insurers will credit your long insurance history with lower premiums.
2. Complete a young drivers training course
While each province has its own requirements, all young Canadians have the option of taking a government approved driving program, and all young Canadians should. Not only will it make you a better driver, successful completion of certified training courses will allow you to progress to a full licence more quickly, and can save you 10-25% on car insurance.
3. Follow the rules of the road
Obeying the law and following the rules of the road is the best way to get an affordable premium.
If you are caught driving under the influence, texting while driving, speeding or doing anything else illegal, your insurance rates will skyrocket. A conviction can have a devastating impact on your premiums for many years. Follow the rules of the road to keep your premiums down.
4. Sign up for usage based insurance (UBI)
Usage based insurance (UBI) is a great way for young drivers to bring the cost of car insurance down. Some companies offer a five percent discount simply for signing up to a UBI program.
Here’s how it works: you either plug a telematics device into your car, or download an app on your smart phone, and the insurance company can monitor your acceleration, braking and mileage.
Assuming you drive well, your insurance premium will go down. It is the only way to prove to an insurance company that you are a safe driver without having a long driving record to fall back on.
As an inexperienced driver, it is possible that you will make some mistakes such as occasionally braking too hard. The good news is a telematics device cannot be used to increase your rate. In other words, opting for UBI is a risk-free option when it comes to getting cheaper car insurance.
5. Work hard in school
Some insurers are willing to give you discounts for good grades. The theory behind this is that honours students have demonstrated a good sense of responsibility, and this will translate to safe driving habits.
6. Ask about discounted rates for alumni
Are you in college or university? Many insurance companies offer preferred rates to alumni and students. These rates will have been negotiated by your school.
7. Increase your deductible
The deductible is the amount you agree to pay in the event of an insurance claim. Often, this is set at $500, but increasing the deductible to $1,000 can reduce the monthly expenses. If you are willing to pay a larger portion of the expense, the insurance companies will be happy to reduce your annual rate. Be careful though, while it is tempting to accept a larger deductible in exchange for a lower rate, you must have enough money saved to cover the deducible if you need to make a claim.
8. Bundle your insurance policies
Almost all insurance companies offer multi-line discounts, or reduced rates when you have more than one insurance policy with them. If you live at home, it might be worth having all of your family’s policies with the same insurer. If you live away from home and are renting, consider bundling tenant insurance alongside your auto insurance policy.
9. Reduce the risk of your car getting stolen
Another factor insurance companies take into consideration when determining your auto insurance premium rate is the likelihood of your car getting stolen. If you live in a neighbourhood with high crime, or your car is desirable to thieves, your insurance premium will be higher.
Each year, the Insurance Bureau of Canada (IBC) produces a list of the most stolen vehicles in Canada. In 2018, nine of the top ten were iterations of the Ford F-Series range of pickups, but it varies from province to province and year to year. If your vehicle is on this list, you will likely have to pay more for car insurance.
If you take anti-theft measures such as installing an alarm system or parking in a secure location each night, insurers will be more willing to offer a lower rate.
10. Pay your insurance bills on time
For many young Canadians, budgeting and paying bills can be a struggle. However, your insurance bill should always be paid on time.
If you are late with insurance payments, or your bank balance is too low to honour a direct debit, you will be penalized with higher rates when your policy is up for renewal.
While data suggests that today’s teenagers are less likely to drink and drive than previous generations, they are still a high risk demographic.
An American study by the CDC found that young drivers with a blood alcohol level of just 0.08, are 17 times more likely to die in a crash than those who have not been drinking. Youngsters driving under the influence of marijuana are also at risk of being involved in a serious accident.
If your teenage son or daughter is driving to a social event, ensure they have enough cash to take a cab home if necessary.
Texting while driving is another risky behaviour that many young drivers engage in. Set a good example by avoiding these distractions yourself.
This is Canada, and sooner or later, your young driver will find themselves confronted by bad weather. Ensure they are prepared for this challenge by taking them for driving lessons in adverse weather conditions.
Add your son or daughter to your roadside assistance program. That way, if they do get stuck, they know who to call for help.
If you have a young adult learning to drive on your insurance policy, restrict them to the most affordably insured car.
While they may be less enthusiastic about driving the old family sedan than your shiny new sportscar, it will have less impact on your premium, and will be less upsetting if they scrape the side door when reversing into the garage.
For drivers of all ages, the best way to save on car insurance is to drive safely, avoid distractions and maintain a clean driving record. The second best way is to compare auto insurance quotes on Rates.ca.
Conscientious young drivers deserve a break on car insurance and we are here to help. We work with dozens of Canada’s most trusted insurance providers to find you the best deals. Compare quotes today and see how much you can save.
Let us know your renewal date and we’ll let you know the best time to shop the market for the cheapest car insurance rates.