Guest post by RateHub.ca.
The freedom of youth is soon marred by obligation. Between high school and university, you might move out on your own, maybe buy your first car, and after graduation, you're likely paying off student loans. In a recent KPMG study, 73% of millennials said homeownership is an investment in financial stability, so there's that, too.
Saving and investing early on will help your long-term financial outlook. But we’re not here to advocate for cutting back on lattes, never eating out, or making your own clothes - that takes more than a 4-minute blog post. Instead, we’re going to narrow our focus on how to save money on young driver's car insurance.
First, let's understand how insurance works. By law you need insurance to drive a car, whether you're insured on your parent's policy, or you get your own. Also, know that Ontario works on the no-fault system. It doesn't mean you're never at fault, but rather in any claim, you only ever deal with your insurer.
Mandatory car insurance in Ontario includes the following coverages:
You can add to any standard policy coverage like collision, which repairs your car after a crash, or comprehensive, which protects your vehicle when it's parked (e.g. theft, vandalism, falling tree, broken window). 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 costly, 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.
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, meaning they speed, drive under the influence, or text and drive.
A young driver only has limited experience behind the wheel. So, while you might have a clean driving record, you don’t have an extensive history of safe driving.
Insurers will also look at the type of car you drive as a determining factor for your rate. Typically, young drivers are buying sedans & coupes, not SUVs and minivans - which are cheaper to insure.
Some new drivers may miss payments, or worse: lie on their insurance application, thus committing insurance fraud.
All these factors add up to expensive rates for young drivers.
There are many ways to save on car insurance as a young driver; some are easier to achieve than others. Below, you can find a few quick pointers to help you save - some easy, others take more time, use them all for the best results.
Like life, a good road is a well-travelled one. While you may be burdened with obligations, there are many solutions to any problem. Learn how to save money on car insurance now and as you age, and with a clean driving record, your prices will continue to come down.
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