It’s generally known that young drivers face high car insurance prices. And, yes, age 25 is the magic point where car insurance costs start to fall. Yet not every young driver pays the same rate, nor will every policy fall by the same amount. Have you wondered why it’s so hard to get a straight answer about the precise cost of car insurance? Understanding how rates are calculated in the first place makes the process easier to understand.

How Car Insurance Premiums are Calculated

Car insurance premiums build on a number of factors, from the place you live to the car you drive. Insurance companies look at a number of statistical factors that apply across a wide range of population. When it comes down to a single driver, these statistics may not apply, but insurers use risk factors generated from these statistics nonetheless.

One of the most compelling statistics working against young drivers is that those under 25 are much more likely to be in car accidents, particularly males. This gets reflected in base premiums, along with where the driver lives, the car they drive and how they use it.

Even ignoring age for a moment, a driver’s experience, driving record and insurance claims history all factor into the car insurance equation as well. Lack of any of these will nudge insurance costs up. This creates a double negative effect on a young driver. There’s simply not time to establish history in all these regards.

Discriminatory Car Insurance Pricing

In eastern Canada, New Brunswick and Nova Scotia, there is a movement on to label high insurance premiums across the board for young people as discriminatory. British Columbia, Saskatchewan, and Manitoba each have public auto insurance programs and age is not a factor in premium pricing. Alberta, with a private insurance program, uses a price matrix that also excludes age considerations.

Despite this trend, Ontario’s system still includes the driver’s age as a major risk factor. Those under 25 aren’t alone. After a certain age, seniors switch from a safe risk driving group to high risk. Like young people, accidents happen more frequently, and the nature of these accidents tends to be more severe and expensive to settle.

Ways to Reduce Insurance Costs for Young People

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A young driver in Ontario still faces an uphill climb in the quest for affordable insurance. The best defense is continued use of safe driving habits. A driver of 25 could potentially have 9 years of insurance and driving history. That’s one reason why the statistical drop happens. Drivers still at home can be listed on a parent’s policy as soon as they receive G1 level licensing, but insurance history doesn’t start until the G2 level.

Every insurer has a unique formula for policy pricing. Young drivers can take advantage of this by aggressively shopping the insurance market. There’s sometimes hundreds of dollars difference between companies for the same coverage. Rather than spending days on the phone with agents and brokers, Ratelab’s car insurance calculator presents a free, no obligation way to survey dozens of insurers for the lowest prices.

Some of Ratelab’s insurance partners have special programs for young drivers. Enter your postal code above to begin your search for the most affordable coverage to meet your needs.