First Time Car Insurance

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.

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.

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.

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.

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.

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.

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.

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

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.

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.

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.

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.

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.

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.

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.

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.