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Auto insurance for new drivers can cost thousands of dollars a year. Here’s how to save on new driver insurance in Ontario.
If you’re a newly licensed driver in Ontario—first, congratulations. Second, prepare yourself for the cost of car insurance. People often assume that teenage drivers are the most expensive to insure, but the truth is that high insurance rates can affect all new drivers, regardless of age. Inexperience behind the wheel can cost you—but I’ll show you several strategies that can help you save money.
On average, insurance for new drivers in Ontario ranges from $3,000 to $6,000 per year, according to Ratehub.ca. (Both Ratehub.ca and MoneySense.ca are owned by Ratehub Inc.) Where exactly you’ll fall in this range will depend on several factors, including your gender, driving history and location, as well as the make of your vehicle, among several other factors.
Underwriting policies vary between insurers, but below are typical quotes for individuals who started driving at age 16 and completed Ontario’s graduated licensing program. (Insurers quote transgender and non-binary individuals based on their sex identified at birth.) The policy quotes below do not include any discounts or modifications.
| Age | Sex | Low | Average | High |
|---|---|---|---|---|
| 18 | Male | $3,751 | $7,340 | $10,928 |
| 18 | Female | $3,173 | $5,150 | $7,127 |
| 30 | Male | $2,835 | $4,195 | $5,555 |
| 30 | Female | $2,871 | $4,519 | $6,167 |
| 35 | Male | $3,051 | $4,031 | $5,010 |
| 35 | Female | $3,186 | $4,356 | $5,527 |
| 40 | Male | $2,493 | $4,035 | $5,576 |
| 40 | Female | $2,491 | $4,349 | $6,206 |
Source: Ratehub.ca
In 2017, Ontario added a third gender option, gender X, to driver’s license applications (and by 2019, so had the rest of the country). “There are no Canada-wide guidelines on how insurance companies should set rates for gender X drivers,” says Ratehub.ca. “Some insurers may offer a rate in line with what a female driver will see; others may offer an average rate between the male and female premiums.”
Several factors contribute to the high-end insurance costs for new drivers in Ontario, but they all boil down to one factor: risk. It’s more expensive for insurance companies to underwrite (promise to pay for) these policies because newer drivers have less experience and a higher accident rate than more experienced drivers.
According to the American Automotive Association, crash rates for drivers aged 16 to 19 are two to four times higher than drivers aged 30-plus. Canadian statistics are similar, the Insurance Bureau of Canada (IBC) has confirmed. Insurance companies need to ensure that the premiums they charge drivers can cover the cost of payouts in the case of an accident, resulting in considerably higher rates for less experienced drivers.
Car insurance rates are also influenced by market conditions (inflation, labour costs, repair costs) and other factors (theft, fraud), according to the IBC’s website.
While insurance for new drivers may cost a lot, there are several things you can do to lower the expense.
If you’re a new driver, it may cost less for you to be added to a family member’s existing insurance policy as an occasional or secondary driver than it would to get a separate policy. Note, however, that if you’re listed as an occasional or secondary driver, it’s extremely important that you’re not using the car more than 50% of the time, or you risk losing your coverage.
Pay-as-you-go or usage-based insurance models involve your insurer tracking your driving behaviour through a device or app. This allows it to tailor your premium based on your actual driving habits. If you’re a cautious and infrequent driver, this option could lead to substantial savings since you’re essentially being charged based on how much and how safely you drive.
Enrolling in a BDE course not only equips you with essential driving skills but also demonstrates to insurance companies that you’re dedicated to becoming a safe driver. This commitment could lead to lower premiums, since insurers often view educated and well-trained drivers as lower-risk. In Ontario, drivers who complete a Beginner Driver Certificate Course are typically treated as drivers with three years of driving experience, rather than none, which can help bring insurance costs down. Typically, BDE courses can lower insurance premiums by 5% to 20%. (Read more about how driving school can lower insurance costs.)
If you’re a student, maintaining good grades can work to your advantage in lowering insurance costs. Many insurers offer discounts to young drivers who demonstrate responsibility and discipline in their academic pursuits. Providing proof of your high GPA could lead to noticeable reductions in your premium.
Bundling multiple insurance policies, such as auto and home insurance, with the same provider can yield attractive discounts. This strategy not only simplifies your insurance management but also creates an opportunity for cost savings by leveraging your relationship with the insurer for multiple policies. Discounts of 5% to 10% are common when bundling home and auto policies.
Take advantage of the competitive insurance market by comparing rates from multiple providers. Rate comparison sites and insurance brokers can be a significant help when comparing rates. By obtaining quotes from various insurers, you can identify the most cost-effective options that offer the coverage you need.
You or a family member may have access to insurance discounts through a university alumni association, a workplace benefits program or other sources. Find out first before you lock yourself into a more expensive policy.
As a new driver gains experience and maintains a clean driving record, insurance premiums tend to decrease. Typically, after three years of driving experience without any at-fault accidents or traffic violations, drivers start to see a noticeable drop in their insurance rates—a reward for consistent good driving.
This is an unpaid article that contains useful and relevant information. It was written by a content partner based on its expertise and edited by MoneySense.
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