How much is insurance for a new driver?

How much does car insurance cost for a new driver? 

Many factors influence a new driver’s insurance premiums. Some of the main considerations include:

• The driver’s profile: Demographic factors like age and gender influence premiums. Drivers under the age of 25 tend to pay higher premiums, because data from insurance companies suggests a lack of experience increases the risk of accidents. Similarly, data shows that male drivers are involved in more vehicle-crash deaths, increasing their risk profile. 
• Type of vehicle: Insurance companies base your premiums not just on you as a driver, but also on the car you’ll be driving. They’ll consider how expensive it would be to fix the car if you got into an accident, as well as how likely it is to be stolen. Contrary to popular belief, the colour of your vehicle does not influence your premium. 
• Where you live: The province you reside in, as well as the specific area, can influence what you pay. The cost of new driver insurance can be higher in cities than in rural regions, for example, because there are more accidents in heavily populated areas. Prices also differ by province, the difference being that some provinces offer public, government-run insurance programs and others operate on a private (or hybrid public-private) model.
• Driving history: Premiums will be more expensive if you have any history of traffic tickets or car accidents.

The amount of coverage you decide to purchase will also have an impact, and minimum coverage amounts vary considerably by province and territory. To give you an idea, in Ontario, a new driver must have third-party liability insurance with a minimum coverage of $200,000, as well as accident benefits, direct compensation property damage insurance and uninsured automobile coverage. 

The cost of insurance depends on numerous factors, so there’s a huge range in premiums across the country. On average, you can expect to pay anywhere from $1,500 to $7,000 per year.

Does age affect the cost of new driver insurance?

Premiums for new drivers who are older are generally less expensive than for those who are under the age of 25 (with the caveat that very senior drivers may pay more). A new driver in their 30s or 40s may pay anywhere from $50 to $100 less per month.

The reason is simply that, statistically, young drivers tend to have more accidents due to their inexperience. The good news is that as you drive and maintain an accident-free record, your insurance costs will decrease over time.

Keep in mind that, even for older drivers, car insurance rates depend on factors like your driving record and place of residence. Since prices among insurers can range significantly even within the same region, it’s always a good idea to shop around and compare prices.

How do premiums vary by province? 

The average cost of car insurance in Canada is $1,142 annually, according to data from the General Insurance Statistical Agency, but the variation between provinces is significant. British Columbia has the highest cost, with drivers paying an average of $1,832 a year, while Quebec has the lowest—the average is $ 717.

The range in provincial car insurance premiums is due to differences in average auto repair costs, the relative frequency of insurance fraud, and the prevalence of injury claims and related lawsuits. The mandated minimum amount of coverage a driver must carry in a given province also matters, as does the insurance system in place.

In B.C., Saskatchewan and Manitoba, drivers purchase insurance from the government. In Alberta, Ontario and the Atlantic provinces, which use private insurance companies, drivers can shop around and compare providers. Quebec is the only province that operates on a hybrid system. 

Do I need my own insurance policy? 

If you plan to share a vehicle with another driver (like a parent, for example) and only drive occasionally, you can get secondary driver insurance, also known as occasional driver insurance. Secondary driver insurance is a more affordable option because you don’t have your own policy. Rather, you are added to the main driver’s policy, and that person pays a higher premium.

However, there are circumstances in which you must get your own insurance policy. If you are going to drive the car more than once or twice per week—for example, as part of your daily commute to work—you will need your own policy. A good rule of thumb is that you’ll require your own policy if you drive another person’s vehicle more than 50% of the time.

There are no age limits on who can be considered a secondary driver. If you’re unsure of what constitutes a “secondary driver,” ask your insurer. Failing to abide by the rules of your policy could render your coverage void. 

How much does secondary insurance cost?

Unfortunately, it is not free to add a secondary driver to your policy, and the cost can vary widely across Canada. That being said, adding an experienced driver who has no history of insurance claims will cost much less than adding a young driver with far less experience.

A primary driver can expect to pay anywhere from a few dollars to a few hundred dollars more per month when adding a secondary driver to their policy. The final cost will depend on many factors, including:

• The age and experience of the secondary driver
• The secondary driver’s history of tickets and parking fines
• The length of time the secondary driver has been driving

How to lower your car insurance as a new driver 

Understanding your policy and comparing the prices and coverage offered by various providers is one of the best ways to ensure you’re getting a competitive rate. However, here are some other ways new drivers may be able to lower their insurance costs.

• Get secondary driver insurance: If you will only be driving occasionally, it may be worth getting added as a secondary driver on an existing policy. Just be sure that you’re not driving the car more than 50% of the time, or you’ll be considered a principal driver.
• Ask about student discounts: Some insurers give discounts to university students, for example. Some insurance companies also give discounts to university alumni.
• Take a driver-training program: Some insurance companies may offer discounts to new drivers who have taken a recognized driving course, because insurers will have more confidence in their driving ability. 
• Pick the right car: Cars that are more likely to get stolen or are more expensive to repair will cost more to insure. Vehicles that are equipped with safety features like anti-theft devices and rear-view cameras may also have lower premiums.
• Increase deductibles: The higher your deductibles are, the less you’ll pay in insurance premiums, but the more you’ll pay out of pocket if you get into an accident. 
• Pay the entire premium at once: Many insurers offer a small discount to drivers who pay their premium in one yearly installment rather than in smaller monthly increments.

The bottom line 

For the reasons described above, there’s no simple answer to the question, “How much is insurance for a new driver?” Ultimately, it depends on a host of factors, such as your province of residence, your age and gender, and whether or not you qualify as a secondary driver. Doing your research will help you budget for the costs of being a new driver.

More on auto insurance:

• Uninsured motorist coverage 101: What you need to know
• How much does it cost to insure an electric car?
• Can you get affordable car insurance after a DUI?
• Everything you need to know about your car insurance deductible

About Sandra MacGregor

Sandra MacGregor has been writing about personal finance, mortgages, investing and credit cards for over a decade.

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