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Insurance for young drivers: the basics.

Getting your driver’s licence is exciting. Unfortunately, insurance for your first set of wheels often comes with a hefty price tag.

On average, the cost of car insurance for young drivers (those under age 25) is at least double what drivers in their thirties and beyond pay. Drivers in their teens bear the brunt, paying the most for car insurance out of all young drivers.

Thankfully, the trajectory of car insurance prices is a downward slope: you pay the most in the beginning but over time the price goes down. But when you're young, the cost of insurance can really sting.

Another important thing to note is that Canada has a tapestry of car insurance systems. With different insurance systems in place in each province, not all young drivers are viewed the same way.

Some provinces allow insurance companies to use age to determine rates, while other provinces do not. In these provinces, insurance companies are only allowed to rate drivers based on insurance history and the length of time they’ve held insurance. This kind of protection is common in provinces that have a public car insurance system, which means that consumers obtain coverage from a provincial agency.

But if you live in a province with a private insurance market, one thing’s for sure: the key to finding the cheapest car insurance for young drivers is to compare the market before buying a policy.

LowestRates.ca data finds that young drivers find the largest savings — in part due to the fact that they tend to pay the highest rates to begin with.

Young drivers can find cheaper insurance today by comparing 75+ quotes from Canada’s leading insurance companies on LowestRates.ca.

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CustomerLocationVehicleLowest RateAverage RateSaved
Quote from September 24, 2021
Customer
Male, 24 years old
Location
ontario
Vehicle
2012 SUBARU IMPREZA 2.0I 4DR AWD
Lowest Rate
$5,408/yr
Average Rate
$8,148/yr
Saved
34.00%
Quote from September 24, 2021
Customer
Male, 26 years old
Location
ontario
Vehicle
2013 CHEVROLET TRUCK/VAN ORLANDO LT 4DR 2WD
Lowest Rate
$2,825/yr
Average Rate
$6,381/yr
Saved
56.00%

Your young drivers auto insurance questions, answered.

Who can be classified as a young driver?

Generally speaking, a young driver is anyone 25 and under.

In most provinces, teens can start driving at age 16. However, in some regions, teens are allowed to start learning to drive at age 14 or 15 (Alberta and the Territories, respectively).

The age at which you are allowed to begin driving up until the age of 25 is when your insurance rates will be the highest. Rates gradually begin to decline every year in the late twenties. By age 30, most drivers are rated normally.

In provinces with public car insurance systems (Manitoba, Saskatchewan) and in most Atlantic provinces (Nova Scotia, Newfoundland and Labrador, and New Brunswick), insurance companies are barred from using age to determine car insurance rates.

Instead, insurers have to go by the length of time the driver has held insurance (with one exception: in Nova Scotia, insurance companies are allowed to rate new drivers for their age, but only for the first nine years).

How much is insurance for young drivers?

The best way to find out how much car insurance will be for a young driver in your province is to apply for a quote. This will provide an accurate gauge of the cost of insurance for a young driver. It’s not uncommon for rates to be double that of what a more experienced driver pays.

Why is insurance expensive for young drivers?

Insurance companies look at a young driver's experience to determine the likelihood of them getting into an accident. If you’re a new driver, you have no track record. Plus, the probability of a young driver getting into an accident or causing a loss is statistically higher than someone middle-aged with decades of driving experience. This, essentially, is why vehicle insurance for young drivers is expensive.

One of the most effective ways to ensure that you’re getting the lowest possible premium as a young driver is to apply for insurance quotes before locking into a policy.

What is the best insurance for young drivers?

For the most part, the type of insurance you need is based on the type of car you’re looking to insure.

New cars are generally more expensive to insure because they cost more to replace. It’s also a good idea to buy extra insurance coverage to insure you can afford to replace or repair it. You may want to buy collision and comprehensive car insurance for this reason. Leased cars not only cost more to finance, but you are also required to purchase collision and comprehensive insurance.

The main goal of a young driver should be to build a spotless insurance history. One of the best ways to do this is to buy your own car and be registered with your insurance company as the primary driver. This ensures that by age 25, you will get the lowest possible rate for your age group.

One way to make this endeavour more affordable for young drivers is to purchase an old car. This way you don’t need to worry about extra coverage, which will reduce your monthly premium.

If buying a car is not an option, you can also opt to be listed as a secondary driver on a parent’s insurance policy. However, as a secondary driver, you may not use the car as frequently as the primary driver. If you do, it’s insurance fraud.

If you’re not a confident driver yet, you may want to buy a claims and/or forgiveness endorsement. If you get into an accident or need to make a claim, you don’t have to worry about it increasing your premiums. The endorsement protects you from this after your first accident or claim.

Ultimately, a good insurance policy for a young driver covers the following bases:

  • Affordable payments. While a high premium is inevitable, missing a car insurance payment will lead to the insurance company increasing your premiums the following year. A young driver must have the means to make payments on time.
  • Offers enough accident benefits.
  • Provides compensation for repairs or a replacement vehicle if having a car is a necessity and the young driver does not have savings to fund these expenses.
  • Provides an accident or claims forgiveness endorsement if the parents or young driver is still building up confidence about their driving ability.

Car insurance for teens

Looking for cheap auto insurance for a teen driver? While what constitutes ‘cheap’ will vary for each person, it’s a fact that teenage drivers pay significantly higher rates for insurance than drivers in their twenties (not to mention ones in their thirties and forties). When you’re shopping around for car insurance, the best rate for teens will still be higher than what an experienced adult driver would pay.

Insurance deals for young drivers

Insurance companies don’t often offer ‘deals’ to consumers in the same way that a car salesman, who’s concerned with selling off inventory, might offer.

The most important thing you can do to ensure you’re getting the best rate is to keep a spotless driving and insurance record.

However, you can get discounts on car insurance. Here are some ways to lower your premium with discounts:

  • Go with the same insurance company as your parents. Insurance companies offer discounts to families.
  • Maintain a high GPA. Many insurance companies offer discounts to high school and post-secondary students with good grades.
  • Sign up for a telematics program. This gives your insurance company permission to monitor your driving habits via a smartphone app. You will get a discount for signing up and a larger one when your policy renews.

How to get cheap insurance for young drivers

The most important thing you can do to get cheap insurance is to shop around for car insurance. While young drivers pay the highest auto insurance rates — with teens paying the highest premiums of all — our data shows that young drivers can potentially reap the largest savings. According to LowestRates.ca data, the average savings for Toronto drivers under 25 who compare rates is $1,477 annually. As you can see, it pays to shop the market.

Lisa Coxon

Lisa Coxon

About the Author

Lisa is an Editor and Writer for LowestRates.ca. Her work has appeared in Reader’s Digest, Toronto Life, Canadian Living and TVO. As a child, she diligently hoarded the $50 bills that fell out of her Christmas cards. Adult Lisa is working hard to resurrect those stockpiling tendencies.

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