Guest post from ratehub.ca.
The freedom of youth is soon clouded by compulsion. Between high school and college, you might be moving on your own, maybe buying your first car, and after you graduate, you might be paying off student loans. In a recent KPMG study, 73% of millennials said owning a home is an investment in financial stability, so that’s in there too.
Saving and investing early on will help your long-term financial outlook. but we’re not here to advocate cutting down on lattes, never going out to eat, or doing your own laundry, that takes more than 4 minutes on the blog. instead, we’re narrowing our focus on how to save money on car insurance for young drivers.
how car insurance works in ontario
First, let’s understand how insurance works. By law, you need insurance to drive a car, whether you’re insured on your parents’ policy or you get your own. Also, know that Ontario works in the system through no fault of its own. It does not mean that you are never at fault, but rather that in any claim, you only deal with your insurer.
compulsory car insurance in ontario includes the following coverage:
- third party liability protects you after you damage someone else’s property or injure someone.
- accident benefits give you access to medical coverage, as well as other benefits beyond ohip, after an accident.
- dcpd pays to repair your car after an accident when you are not at fault.
- uninsured driver protects you and your car after an accident if the other driver does not have insurance.
- pass a driver education course and your full g license. Laying a good foundation for safe driving is essential.
- Ask your parents to add themselves to their policy. Take advantage of your insurance policy and appear as an occasional driver to access a lower rate. some insurers even offer a student discount away from home.
- Use your school affiliation. Student auto insurance discounts are often available, but you should ask. The best place to start might be to contact your own institution to see if they have group discounts with any particular insurer. Believe it or not, insurers like good ratings, too.
- package. If you’re renting and paying for renters insurance, you can bundle it with your auto insurance and save. Depending on your policies and your insurer, you could save 10-15% on your annual payment.
- Shop online and compare quotes. It’s easy to enter your details and compare personalized rates in minutes. Always compare the market before finalizing your policy.
- Consider usage-based insurance (ubi). ubi measures your driving habits, including speed, braking, and how you handle a turn with an app on your phone. The better you drive, the more you’ll beat a young driver’s rating and save.
- manage your policy. You can increase your deductible, the part you have to pay before the insurer pays the rest, meaning you won’t file multiple small claims. consider dropping collision and comprehensive coverage if you bought a used car. Finally, if you can afford it, pay your premiums annually instead of monthly.
You can add coverage like collision, which repairs your car after a crash, or comprehensive, which protects your vehicle when it’s parked (eg, theft, vandalism, falling trees, broken window) to any standard policy. As a general rule, the more protection you have, the more expensive your car insurance will be.
That said, understand that insurance for a new driver is always expensive, even without additional coverage. Once we understand why it’s expensive, we can reverse engineer it to figure out how to get cheaper car insurance.
why car insurance is expensive for young drivers
Insurance companies use historical data to categorize and help determine their rates. historically, young drivers take more risks. They fall into the category of pleasure seekers, which means they speed, drive under the influence, or text and drive.
A young driver only has limited experience behind the wheel. therefore, while he may have a clean driving record, he does not have an extensive safe driving record.
Insurers will also consider the type of car you drive as a determining factor for your rate. young drivers typically buy sedans & coupes, not suvs and minivans, which are cheaper to insure.
Some new drivers may default, or worse: lie on their insurance application, thereby committing insurance fraud.
All of these factors add up to expensive fees for young drivers.
how to get cheap insurance as a young driver
There are many ways to save on car insurance as a young driver; some are easier to achieve than others. Below are some quick tips to help you save: some are easy, some take more time, use them all for best results.
Like life, a good path is a good path. While it may be loaded with obligations, there are plenty of solutions to any problem. Learn how to save money on car insurance now and as you get older, and with a clean driving record, your prices will continue to drop.
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