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The Complete Guide to Car Insurance for New Drivers

Friday, 19 January 2024

Receiving your driver’s license is an exciting milestone that people across Canada celebrate every day. While this achievement unlocks the freedom and independence to explore the open road at your own pace, it’s important that new drivers have car insurance before doing so. From mandatory insurance and optional types of coverage to factors affecting cost and finding the best car insurance for new drivers, this blog has you covered. Keep reading to learn more! 

The Basics of Car Insurance for New Drivers

As a driver in Canada, you are legally required to have coverage from an auto insurance policy. While the minimum legal requirements vary by province, you must possess third-party liability, uninsured automobile, and accident benefits coverage everywhere in the country, except for Newfoundland and Labrador. You can learn more details about these coverages below:

Third-Party Liability Coverage:

This mandatory coverage protects against financial loss when a driver is responsible for an accident that results in injuries or damages to others. 

Uninsured Automobile Coverage:

This comes into play if an uninsured driver hits you or if you are the victim of a hit-and-run. Damage to your vehicle and any medical expenses you incur will be covered.

Accident Benefits Coverage:

This provides no-fault coverage for medical expenses, rehabilitation, income replacement, and other accident-related costs.

Additional Auto Insurance Coverages:

If you would like further protection while driving, there are several forms of coverage you can choose to add to your policy. Here are some ways you can do so:

Collision Coverage

This helps pay for repairs to the insured vehicle in the event of a collision, regardless of who is at fault. It covers damage caused by striking another vehicle or object and paying for a replacement vehicle.

Comprehensive Coverage 

If an event such as theft, vandalism, natural disasters, falling objects, or collisions with animals damages your vehicle, comprehensive coverage will help cover the cost of repairs.

Specific Perils

Rather than offering broad protection like comprehensive coverage, specified perils insurance explicitly lists the events or risks it covers. Common perils may include fire, theft, natural disasters, and other hazards.

All Perils

This coverage is more inclusive than collision or comprehensive coverage and offers a broader scope of protection for the insured vehicle.

How Much is Car Insurance for New Drivers?

Generally speaking, the cost to insure a new driver is higher compared to more seasoned motorists. While many new drivers have studied provincial traffic laws, attended driver’s education classes, and put in hours of practice with an instructor, they still lack the experience required to be considered low-risk by insurance providers. In addition to experience, many other details affect car insurance for a new driver. We’ll dive into those in the next section. 

Factors Impacting Costs for New Drivers

The following factors are often taken into consideration when calculating car insurance:

  • Age: Younger drivers, especially those under 25, often face higher premiums.
  • Type of Car: Your vehicle's make, model, and year can impact insurance rates. High-performance or luxury cars typically have higher premiums, while cars with better safety ratings tend to benefit from lower insurance costs.
  • Location: Where you live can affect insurance rates. As previously mentioned, each province has a minimum amount of coverage that drivers must possess through their policy, directly affecting rates across the country. Additionally, urban areas may have higher premiums due to increased traffic and a higher risk of accidents. If you live in a neighbourhood with higher rates of theft or vandalism, you may also face higher insurance costs. 
  • Policy Coverage: The extent of coverage you choose will also play a role in determining how much you pay for insurance. In addition to carrying the minimum required coverage, you can opt for protection such as comprehensive and collision coverage. This, however, would likely lead to higher rates. 
  • Usage of the Vehicle: The more you are on the road, the higher your chance of being in an accident. If you drive your car every day, have a long commute to school or work, or frequently use your car to travel out of town, you can expect to pay more for insurance. 
  • Deductibles: The amount you're willing to pay out of pocket in case of a claim affects your premium. Higher deductibles often result in lower premiums, while a lower deductible will lead to higher rates.
  • Insurance Provider: Every insurance company has its own underwriting guidelines and policies. It is quite common for a driver to receive quotes from different providers that vary considerably in price.

How to Find the Best Car Insurance for New Drivers 

Here are some effective tips you can follow to find the best insurance for new drivers:

Get a Quote Through an Insurance Group

Navigating the complex landscape of car insurance for new drivers becomes more manageable when they request a quote through an insurance brokerage like BIG. By leveraging the expertise of unbiased brokers, new drivers can access an extensive network of insurance providers. This will ensure that they are aware of the best rates and coverage options, while also being able to tailor a policy to their specific needs. 

Add The New Driver As a Secondary Driver

By adding the new driver to the policy of someone more experienced, insurers may view the overall risk as lower, which could result in more favourable premiums. This approach allows new drivers to benefit from the primary policyholder's established driving history, helping offset the perceived higher risk associated with novice drivers.

Choose a Less-Risky Car

The type of vehicle a new driver chooses significantly influences insurance costs. Opting for a less risky car, such as a mid-sized sedan with good safety features, can lead to lower premiums. Insurance companies assess the risk associated with the make and model of the vehicle, so selecting a car with a solid safety record and lower theft rates can contribute to more affordable insurance rates for new drivers.

Evaluate Deductibles and Coverage Limits 

Carefully evaluating deductibles and coverage limits is crucial in finding the right balance between protection and cost. Choosing a higher deductible can lower premiums, but it's essential to ensure that the deductible amount is manageable in the event of a claim. Additionally, understanding coverage limits and tailoring them to individual needs can help avoid overpaying for unnecessary coverage, contributing to more cost-effective car insurance for new drivers.

Look Into Discounts

Exploring available discounts is an excellent strategy for reducing the overall cost of car insurance for new drivers. Insurers often provide discounts for good students, bundled insurance policies, completion of defensive driving courses, using winter tires, and much more. Researching and taking advantage of these discounts can significantly lower premiums, making insurance more affordable for those just starting their journey behind the wheel.

Insurance Made Easy with BIG

One of the most important parts of becoming a licensed driver is navigating the roads confidently, and having the right auto insurance policy will help you do that. If you need support finding insurance or advice on determining which policies best suit your needs, contact a BIG broker. They will detail the various coverages you need, highlight optional insurance you can consider adding, and discuss ways you can save on car insurance as a new driver.

By: Devon Gribble