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First Time Car Insurance

First time getting car insurance? Don’t worry, it’s simpler than it looks!

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Who needs first time car insurance?

Young drivers, inexperienced drivers, and recent immigrants can all fall under the broad definition of a first-time driver in Canada. Whatever your circumstances, it is important to have the right car insurance policy so that you are always protected when you are behind the wheel.

Read on and learn about first-time insurance coverage options and ways to keep your premiums down.

First time car insurance for young drivers

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% 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.

While there is nothing you can do about statistics (or your age), comparing auto insurance quotes on a comparison site like RATESDOTCA will help you to find the best available deals.

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Frequently asked questions from young drivers

How can I build up my 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 your parents’ policy as soon as possible. You will save money (in Ontario, 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.

Should I take 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, but 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.

Am I covered under my parent’s car insurance?

If you live at the same address as your parents, you may be covered by their car insurance policy, but you need to be listed as an occasional or secondary driver. This will have an impact on their insurance premiums, but it will also help you to build your own insurance history.

Once you move out and become the primary driver of a vehicle, you will need your own insurance.

Are student discounts available for car insurance?

Students are eligible for all kinds of discounts, including:

‘Good Student’ discount: This discount is a financial reward for full-time student drivers between 16 and 24, who do well in school by maintaining good grades. Savings vary but range from 10% to 15%. If you can show proof of your good performance at school, whether you maintain your grades and GPA levels, or are in the Dean’s list, you can apply for this discount.

Driver’s training: Complete a Ministry of Transportation approved driver’s training program to be eligible for discounts from some insurance companies.

Graduate through the licensing system: Some companies give discounts when you graduate from a G2 to a full G.

School associations: Many colleges and universities are affiliated with insurance companies, allowing students to get better rates.

Advice for parents of young drivers

Here are some things you should discuss with a young driver in your household:

The dangers of drunk and distracted driving

While data suggests that today’s teenagers are less likely to drink and drive than previous generations, they are still a high risk demographic.

A study conducted by MADD Canada showed that car crashes are the leading cause of death among 16 to 25-year-olds, and alcohol and/or drugs are a factor in 55% of those crashes.

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.

Another risky behaviour that many young drivers engage in is texting while driving. Parents can set a good example to their kids by staying focused behind the wheel.

Make sure they are prepared for all weather conditions

We live in 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.

Your son or daughter is living at home, which car should they drive?

If you have a young adult learning to drive on your insurance policy, restrict them to the most affordably insured car.

Sure, they may be unenthusiastic about driving the old family sedan rather than your shiny new sports car, but it will have less impact on your premium, and less upsetting if they scrape the side door when parking in the garage.

Frequently asked questions from new drivers in Canada

New drivers in Canada aren’t always young people, they can also be Canadians who got their licence later in life, or recent immigrants who have driving experience in their country of origin.

Does driving experience in other countries help reduce the cost of Canadian car insurance?

Some people think that a letter of experience or a claims-free record in their country of origin will help lower insurance premiums, but it is rarely true. Generally, insurance companies will not recognize experience from anywhere outside of North America.

In Ontario, recent immigrants from the USA and the UK can exchange their licence and skip the G1 level but from an insurance perspective, your driving record begins the day you get issued with your Canadian driving license.

How much does auto insurance cost in Ontario?

According to a recent report from the Insurance Bureau of Canada, the average cost of an annual car insurance premium in Ontario is $1,505. As a new driver, you can expect to be quoted more than that, especially if you live in the GTA.

Why is first time car insurance so expensive?

When you start to obtain quotes for first-time auto insurance, you may be wondering why your rates are so high when you do not have violations or accidents.

Auto insurance companies must have monies in reserve to cover potential claims filed throughout the year, and failing to collect adequate premiums from drivers based on risk can lead to a loss in profits.

Auto insurance actuaries consider the risk factors when calculating auto insurance rates, and one of the risk factors is how much experience a driver has. If you are a first time driver (no matter how skilled you may be), the car insurance company does not have a record to reference.

Having no previous auto insurance or no experience behind the wheel is sometimes riskier to insurers than having a traffic violation. This is reflected in higher car insurance premiums.

Can you drive a vehicle without insurance?

The short answer is no, you must have valid auto insurance in order to operate a motor vehicle anywhere in Canada.

What is the graduated licence system in Ontario?

Did you know that in Ontario, there are 15 different classes of car licences? Licenses that a driver could hold are class A, B, C, D, E, F, G, G1, G2, M, M with L condition, M1, M2 with L condition. The G Class graduated license refers to operating your standard vehicle. To get a full G license in Ontario, you are required to graduate from one level to the next, which is why it is called a “graduated” licensing system.

G1: This is your learner’s permit. To apply, you need to be at least 16 years old, pass an eye examination, and complete a written test on road traffic rules and signs. This permit will enable you to drive, but there are restrictions.

For example, a G license holder must be in the passenger seat at all times. You cannot drive between 12:00 am and 5:00 am or drive on the 400-highways as a G1 driver.

G2: To graduate to G2 level, you must have had your G1 license for a year if you did not take a Ministry of Transportation- approved driving school program, and eight months if you did complete an accredited training school program. You will also be required to pass a road test. Once you pass and get your G2, you do not need an experienced driver with you in the vehicle on the roads anymore, but there are certain restrictions that you must follow.

For example, a G2 license holder must have a 0% blood alcohol content when driving.

Full G: Once you have had your G2 for at least a year, you must take and pass another road test to graduate to your G licence. Once you pass, you are eligible to drive without the previous restrictions.

However, if you are 21 or younger, certain restrictions still apply, such as 0% blood alcohol content while driving.

As always, the law in Canada is that a vehicle must have valid auto insurance coverage with minimum liability to drive on the roads, so ensure your name is added to the policy of whoever’s vehicle you’re using as you graduate through the program.

Savings tips when purchasing car insurance for the first time

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.

Assuming you stay conviction free, and follow these money saving tips, getting an affordable premium is possible:

Drive smart

Establishing a clean driving record and building a claims-free insurance history is important, as it is the main determining factor when it comes to your insurance costs. Drive smart to avoid accidents, keeping your record clean and rates down as a result.

Take public transit

Insurance companies take your daily commute into consideration when determining your rates. If you drive to school every day, that theoretically increases your likelihood of a claim since you’re on the road more, possibly during the busiest hours. Using public transit can help lower your insurance premiums.

Bundle policies

Insurance companies offer discounts when you bring two or more insurance products under one company. If you are a university student staying away from home, for example, you could bundle your tenant insurance with your car insurance policy to save on both.

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.

Buy the right car

Are you thinking of buying your own vehicle? Check with the Insurance Bureau of Canada and other sources to see how different cars measure up and assess their ratings before you make the purchase. Purchasing a slightly older model with modern safety features can help your insurance premiums to come down. Certain models cost more to repair and find replacements, so insurance is higher for those vehicles. Before you buy, run quotes on the different vehicles to get an idea of what your car insurance payments might be. See our guide on the cheapest cars to insure for more information.

Pay your insurance bill 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.

Reduce the risk of your car being stolen

If you live in a neighbourhood with high crime, or your car is desirable to thieves, your insurance premium will be higher. 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.

Consider 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.

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