Tips for New Drivers About Car Insurance

April 15, 2024

You’re a new driver. What do you know about car insurance?

Once you know the car insurance basics, you’ll be protecting yourself, your passengers, and others. You’ll also need to know how you can save on your car insurance.

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Here are tips for new drivers about car insurance and how to save

Mandatory coverage:

In Canada, car insurance is a mandatory legal requirement for all drivers. As a new driver, you will be required to carry a minimum amount of liability insurance to cover damage you may cause to others. Failure to comply with these laws can result in fines, license suspension, or even legal action.

Basic coverages:

Every new driver should be familiar with the basic types of car insurance coverage:

• Liability coverage: Protects you financially if you're at fault in an accident by covering the other party's injuries and property damage. Does NOT cover damage to your vehicle, which is a common misunderstanding.
• Personal injury protection (PIP) or medical payments: Covers medical expenses for you and your passengers regardless of who caused the accident.
• Uninsured/underinsured motorist coverage: Protects you if you're involved in an accident with a driver who doesn't have insurance or sufficient coverage.

Additional coverage options:

While the mandatory coverage provides basic protection, new drivers may also consider:

• Collision coverage: Pays for damage to your vehicle in case of an accident.
• Comprehensive coverage: Protects against non-collision incidents like theft, vandalism, or natural disasters. Depending on where you live and the local risks, your insurance expert may advise you to opt into this coverage.
• Gap insurance: Covers the difference between what you owe on your car loan and the car's actual cash value if it's totaled.

Why is my car insurance premium so high as a new driver?

Insurance premiums for new drivers can be relatively high due to your lack of driving experience. When an insurance expert builds a quote for you, the factors that influence your premiums include:

• Age and driving experience
• Location
• Type of vehicle
• Driving record
• Credit history (in some cases).

Strategies to improve your insurance premiums as a new driver:

Maintain a clean driving record

Avoid traffic violations, accidents, and other infractions that can increase your insurance premiums. Safe driving habits not only keep you and others on the road safe but also demonstrate to insurers that you are a responsible driver.

Take a defensive driving course

Completing a defensive driving course can not only improve your driving skills but also make you eligible for insurance discounts. Many insurers offer premium reductions for drivers who have completed approved defensive driving courses.

Bundle policies

Consider bundling your car insurance with other policies, such as renters or homeowners’ insurance, with the same provider. Insurers often offer discounts for bundling multiple policies, helping you save on premiums.

Opt for higher deductibles

Choosing a higher deductible means you'll pay more out of pocket in the event of a claim, but it can significantly lower your insurance premiums. Assess your financial situation to determine an appropriate deductible amount that you can comfortably afford.

Take advantage of discounts

Many insurers offer discounts for various factors, such as good grades (for student drivers), completing driver education courses, installing safety features in your car, or having a low annual mileage. Inquire with your insurance provider about available discounts and how you can qualify for them.

Consider usage-based insurance

Some insurers offer usage-based insurance programs that use telematics devices or smartphone apps to track your driving behavior. Safe driving habits, such as avoiding hard braking and accelerating, can result in lower premiums.

Re-evaluate annually

As your driving experience increases and your circumstances change, regularly reassess your insurance needs and coverage options. You may qualify for additional discounts or find better rates with different insurers as you gain more driving experience and establish a solid insurance history.

Choose a safer vehicle

The type of car you drive can impact your insurance premiums. Choose a car with advanced safety features, good crash test ratings, and a lower risk of theft. Cars with a history of low insurance claims tend to have lower premiums. Here’s more on the topic:

Save money on insurance by choosing cars considered safe for new drivers:

Sub-compact cars are typically affordable and easy to maneuver, making them ideal for new drivers. Look for models with advanced safety features like automatic emergency braking and lane departure warning.

Compact sedans often offer a balance of safety, affordability, and fuel efficiency. Look for models with high safety ratings from organizations like the Insurance Institute for Highway Safety (IIHS).

Small SUVs provide the versatility of an SUV with the handling of a smaller vehicle. Look for models with features like blind-spot monitoring and rear cross-traffic alert.

Mid-sized sedans offer ample space for passengers and luggage while still being relatively easy to drive. Look for models with strong crash test ratings and active safety features.

While navigating the complexities of car insurance as a new driver may seem daunting, arming yourself with knowledge about essential coverage, exploring ways to save on premiums, and choosing a safe vehicle can significantly ease the transition into the world of car ownership.