TORONTO — Young drivers in Ontario are facing some of the highest automobile insurance costs in the province, with annual premiums for some newly licensed motorists exceeding $10,000. Insurance experts say students and young drivers can significantly reduce those costs by shopping around, choosing vehicles carefully, completing accredited driver training and maintaining a clean driving record rather than simply cutting important coverage.
The issue could become particularly noticeable in September as university and college students return to school and many begin commuting by car.
An analysis by insurance comparison platform Ratehub.ca found that an 18-year-old male driver in Toronto could face an annual insurance premium of approximately $10,792, compared with $6,077 for a 24-year-old male living in the same postal code. For female drivers, the study estimated an annual premium of $10,128 at age 18, compared with $6,247 at age 24.
The substantial difference illustrates how strongly age and driving experience can influence insurance costs. Insurers generally consider younger and newly licensed drivers more likely to make claims because they have less experience behind the wheel and historically higher accident rates.
The rising cost of insurance is putting additional pressure on young Canadians already dealing with higher living expenses. A recent TD Insurance survey found that 55 per cent of Generation Z Canadians would consider reducing their insurance coverage to save money.
Insurance specialists, however, caution that eliminating useful coverage may provide relatively small savings while leaving drivers financially exposed after an accident or other loss.
Morgan Roberts, vice-president of RH Insurance, Ratehub.ca’s in-house property and casualty brokerage, said insurance companies consider several factors beyond a driver’s age when determining premiums. These include driving history, postal code and, importantly, the type of vehicle being insured.
Young motorists are therefore advised to investigate insurance costs before buying a vehicle rather than purchasing a car first and looking for insurance afterward.
Roberts recommends preparing a shortlist of several possible vehicles and obtaining insurance estimates for each before making a final purchase. Luxury, high-performance and expensive vehicles can be substantially more costly to insure, while more modest vehicles may result in considerably lower premiums.
The difference can be significant because insurers consider factors such as repair costs, vehicle value, theft rates, safety characteristics and claims experience when establishing premiums.
Maintaining a clean driving record is another important way for young motorists to control insurance costs. Speeding tickets, at-fault collisions and other driving violations can significantly increase premiums, and even a single infraction can have a greater financial impact on a young driver who is already paying a high base rate.
For young people living with their parents, being added to a family insurance policy may sometimes be less expensive than purchasing an individual policy.
Whether that is possible depends partly on the number of vehicles and licensed drivers in the household. For example, a household with two drivers and one vehicle may be able to list the younger motorist as an occasional or secondary driver. Where there are three vehicles and three drivers, however, each person may generally need to be insured as a principal driver on a vehicle.
Remaining with a parent’s insurance company can also provide access to multi-vehicle or combined home-and-auto discounts. However, the insurer offering the best price to the parents may not necessarily provide the lowest premium for their son or daughter. Comparing quotations from several insurers remains important.
Ontario’s recent auto insurance reforms have also provided motorists with additional choices about some forms of coverage. Although removing optional benefits may reduce premiums, experts caution against making decisions based solely on the immediate savings.
Roberts said eliminating optional protection for items such as lost educational expenses, non-earner benefits and damage to personal belongings might save only about $100 annually in some circumstances. The relatively small reduction may not justify the loss of financial protection if a serious accident occurs.
Instead, young drivers may be able to achieve larger savings through accredited driver education.
Completing a Ministry of Transportation-approved driver training program can result in meaningful insurance discounts for newly licensed drivers. Insurers often use experience or “star” ratings when assessing motorists. A newly licensed driver who has completed recognized training may effectively begin with a higher rating than someone without accredited driver education, potentially resulting in a lower premium.
Over time, maintaining a claims-free and violation-free driving history can further improve that rating and reduce insurance costs. A nine-star rating, for example, generally represents nine or more years of clean driving experience.
Telematics programs are another increasingly common way for young motorists to reduce premiums. These programs typically use a smartphone application or similar technology to monitor driving behaviour, including speeding, sudden braking and cellphone use while driving.
Drivers who demonstrate safe habits may receive insurance discounts. Depending on the insurer, participating in a telematics program can initially reduce premiums by around 10 per cent, with the possibility of additional savings at renewal based on the driving behaviour recorded.
The technology may also encourage safer driving because motorists know that behaviours such as excessive speeding, hard braking or cellphone use can be recorded and potentially influence their insurance costs.
For young Ontario drivers facing annual premiums running into several thousand dollars, experts say the most effective approach is therefore not necessarily to reduce protection. Comparing insurers, selecting a less expensive vehicle to insure, completing accredited driver training, considering telematics, taking advantage of family or multi-vehicle discounts and maintaining a clean driving record can produce meaningful savings while preserving important insurance coverage.
With some young motorists facing premiums exceeding $10,000 a year, researching insurance costs before purchasing a vehicle could ultimately be as important financially as negotiating the price of the car itself.