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Why Teenage Auto Insurance Rates Are Higher and What You Can Do About It

Oct. 23, 2013
3 mins
A young woman drives with the sun reflecting behind her

For most teens, earning a driver’s licence is a turning point in their high school lives; suddenly, a whole new world is available to them, one that doesn’t require asking Mom and Dad for a ride.

But to access that world, teens will need more than a licence; they’ll also need car insurance. And it doesn’t come cheap.

Residing in a high risk group

Teens may yell “not fair!” but there’s statistical data to explain the high premiums that come with teenage auto insurance rates. Vehicular accidents are the leading cause of death among Canadian teenagers. Per capita, young people represent the highest rates of traffic-related deaths and injuries among all age groups. Why are young drivers so overrepresented?

It's due to a combination of immaturity and inexperience. For drivers under 19, the maximum they are going to be fully licensed is three years. That’s related to cost. They have to be so protective of their driving record. Even one ticket can affect their insurance.

Teenage girls tend to get lower rates

Young female drivers fare better than young male drivers. Young men under the age of 25 are, statistically, a higher risk for companies to insure.

How to lower teen auto insurance premiums

There is no magic solution for newly licensed teens — and their parents — looking to avoid high rates, but here are a few strategies:

  • Take an accredited driver’s education program: When a young driver takes driver’s training, oftentimes an insurance company will offer them a discount. If you have driver’s training, an insurance company may credit you with three years’ driving experience.
  • Drive one of your parents’ cars: If there’s Mom, Dad, an 18-year-old, and two cars, the 18-year-old could be charged as a part-time driver on one of those cars. Being added as a part-time driver on an already insured vehicle is more affordable than insuring a teen driver as a full-time operator on their own car. As for parents who think putting their teen’s vehicle in their own name might save money, think again. Insurance companies could still consider that 18-year-old a full-time driver, since a ratio of three cars to three people could mean the teen has full-time access.
  • If you are getting your own car, buy strategically: Factors like safety ratings can affect the cost of insurance on vehicles. Some cars cost less to insure. Be careful what car you fall in love with because you may not be able to afford it once you factor in insurance.
  • Shop around: Don’t assume that Mom and Dad’s current insurance provider will automatically provide the best rates for the teen and his/her own vehicle. Not all insurance companies target the same driver profile. Some insurance companies are priced better for young drivers than others. This is the perfect opportunity to shop your rate.
  • Go car-less at university: If the teen is a part-time driver on Mom or Dad’s car in Toronto and goes to Kingston for university, they’re not taking the car with them. The parents should speak to their insurance company about a discount because the exposure [to potential accidents] for the insurance company is even less.

Create a culture of safety

The best way for teens and drivers of all ages to access lower insurance rates is by driving safely.

To help raise awareness and find strategies to reduce traffic-related fatalities and injuries among teens, State Farm Insurance has partnered with Parachute to establish a formal National Teen Driver Safety Week (NTDSW). State Farm currently powers Celebrate My Drive, a North America-wide initiative taking place between October 18 and 26 that engages teens in a commitment to safe driving. This year, the initiative in Canada will wrap up with a rally on Parliament Hill to help encourage the official recognition of NTDSW.        

Jaclyn Tersigni

Jaclyn Tersigni is a Toronto-based writer and editor. She's written on everything from tea sommeliers to motorcycle-riding granddads to regifting etiquette. With a journalism degree from Ryerson University, she got her start at ELLE Canada and The Globe and Mail. Her interests and hobbies include all things ocean-related (notably, the beach, oysters and surf culture), overbuying used books and clothing, riding her bike all over town and, most importantly, music old and new.

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