New drivers or new to Ontario drivers have a common challenge, and that’s finding affordable car insurance coverage. Ontario already has some of the highest car insurance premiums in Canada. When you have inexperience, no previous Canadian driving or insurance history working against you, the already high cost of insurance can skyrocket. A good driving record and claims history are the most important personal factors that contribute to low cost insurance premiums and of course these are things that a first time insurance buyer can’t rely on.
How Car Insurance Premiums Are Calculated
There’s good news in that a driver’s history is not the only factor insurers rely on to calculate premiums. These, however, remain out of the driver’s control. There’s some control in choosing a vehicle that, in itself, is inexpensive to insure. Four-door sedans, minivans and crossover SUVs tend to have lower insurance rates.
Where a driver lives means that they are subjected to the statistical data insurance companies collect for their neighbourhoods. These statistics may not have any effect on the new insurance customer, but it is what insurers use to predict claims risk in your area.
A new insurance customer can also adjust how they drive their car. A motorist who drives to and from work daily and accumulates a lot of kilometers every year will pay more than a driver who uses transit to commute and keeps annual mileage down. In Ontario, only some car insurance coverage is mandatory. A driver can reduce premiums by forgoing collision and comprehensive coverage altogether, or opting for high deductibles. Both strategies come with a high financial risk for the motorist.
How to Keep Car Insurance Premiums Low
There are other ways a previously uninsured driver can reduce insurance costs. If the driver can be listed as a secondary driver on an experienced driver’s policy, the impact will be reduced, usually when combined with the fact the new driver uses the vehicle only occasionally.
Taking approved Ministry of Transportation driver training courses may also qualify a driver for discounts on insurance. Usage-based insurance is arriving in Ontario. Some companies offer discounts for installing a device that collects information on driving activities. With positive feedback from the device, longer-term insurance discounts are possible.
The best way to find affordable coverage is through comparison shopping. Insurance companies do not have set prices which are shared and standard. Each insurer has its own way to calculate premiums in attempts to gain competitive advantages over the other companies.
How much does new driver insurance cost in Ontario?
There’s no easy answer to this question. So many factors go into the pricing of insurance that nearly every driver pays a unique price. For example, a new driver living in Guelph has a huge advantage over a driver from Brampton or Vaughan, the most expensive addresses for car insurance in Canada. Even experienced drivers pay widely varying amounts. The policy that costs $800 in Guelph approaches $2,000 in the suburbs to Toronto’s north and west.
The tips above for keeping costs low work from day one for a new driver. Keeping a clean driving record, free of traffic tickets and insurance claims, produces the lowest insurance premiums for any driver. Of course, a new driver has less history to draw from, which in turn increases their risk determination. This may prevent some users from adding a new driver to a car’s insurance, even though that driver uses the vehicle.
There are two problems with this, however. Should an accident occur and the insurance investigation reveals a new driver with access to the vehicle is not named on the policy, claims could be denied. Insurers have the right to know, accurately, who drives the vehicle. Saving money on premiums now may cost in lost benefits while increasing insurance costs in the future.
The second problem comes in the long term, when looking ahead to what a new driver pays over time. Listing a new driver as soon as possible allows for the greatest potential to build driving history. In fact, in Ontario, insurers do not charge additional premiums when a G1 driver joins a policy. Only after the driver obtains G2 level do rates increase.
When does car insurance go down for new drivers?
There isn’t any magic number for the age a driver’s premiums go down. While age 25 often gets the credit for this, in fact a driver sees rate decreases at their first policy renewal. Every year a driver maintains a clean driving record, the same policy costs less, well into a driver’s 30s.
However, the rate of that decrease is not even each year, and it may well be at age 25 that a driver sees the biggest jump, but that’s not an across the board effect. For example, a driver who gets their G1 at age 16, G2 at 17 and full G at 18, while being listed on a parent’s policy or their own from the first day has nine years of experience and history at age 25. The driver who gets their G1 at 18 is, at best, two years behind the other. Any further delays in upgrading the graduated license steps may also delay the effects of experiential price decreases.
Another downward price influence is marriage. A driver marrying at age 25 has this added to previous driving experience, which may exaggerate the “25 effect.” Not all provinces permit marriage as a risk determination factor, but at the time of publishing, Ontario retained this measure.
Note also that Ontario insurers have leeway in establishing their own prices and procedures, so not all companies charge the same prices for similar policies. For this reason alone, careful comparison shopping for auto insurance could pay enormous dividends for the new driver.
Right here at RateLab, you have a powerful tool in the car insurance calculator. Enter your data for the car insurance coverage you want and let RateLab’s quote engine search over 30 car insurance providers. It will return with the most affordable estimates for premiums that match your needs. Finding the right insurance company could save you hundreds of dollars annually.