The Teen Driver's Guide To Car Insurance
Canadians are able to apply for a driver's license when they reach sixteen years of age
. Along with the minimum driving age; Canadians have several other rules which they must abide by to drive on our roads. These driving rules might seem complicated, but really they're quite simple. They also affect the price you pay for your auto insurance.Your mom or dad may handle the details (and premiums) of your auto insurance for you. There are many ins and outs in the car insurance world. I'll quickly explain how your rates are calculated, and several discounts currently available in Canada. We'll clarify these points below. You'll receive a crash course on auto insurance as it relates to teenagers.
Finally Ready To Drive (Or Are You?)
Many adults believe that teens are too young to responsibly handle a motorized vehicle. They argue the age at which teens can legally get behind the wheel should be raised. Most provinces have settled for a graduated licensing system instead. It is believed that this type of system allows new drivers to get experience without undertaking big risks.
Every province and territory handles their program differently. For example, in Ontario, there are two stages: G1 and G2. You're required to hold the G1 license for twenty months before graduating (by passing a test) to a G2 license. Meanwhile, Saskatchewan's program has 3 levels: Learner, Novice 1, and Novice 2. You can move through these levels in 18 months before graduating to a Class 5 (or experienced driver) license.
Insurance companies keep a careful eye of your progress as you move through the graduated licensing system. At The first level of graduated licensing is often cheap because you'll be required to have an experienced driver in the car at all times. Insurance companies perceive you to be a small risk when you're with an experienced driver. Once you graduate, and are able to drive without supervision, your parents' premiums will rise - often, dramatically. This is because the risk of your being involved in an accident rises.
Why Car Insurance Companies Seem To "Target" Young Drivers
Many teenagers wonder why car insurers seem to "punish" them for being young. After all, premiums are much higher for young drivers. It's important to realize that insurance companies rely heavily on data when calculating rates. Their data typically shows young drivers are more likely to be involved in events that result in claims.
Every policyholder is assigned a risk class. In the case of teenagers, the risk is large due to their relative inexperience behind the wheel. Moreover, crash rates tend to be higher for young drivers. Since crashes lead to claims - and for the insurer, an elevated risk of insurance loss - higher rates are applied.
Auto insurers don't "target" teens with higher rates simply due to age. Instead, their rates are based on data that show young drivers - or their moms and dads - file more claims.
Keeping Your Auto Insurance Rates Manageable
Given the above, how can you keep your premiums at a manageable level? Enrolling and successfully completing an approved driver's education course will help significantly. Insurers consider completion of such a course as an indication of lower risk. They'll lower your parents' rates (assuming you are added to their policy), accordingly.
Another key to making sure your premiums stay at a reasonable level is to drive safely (not only during times when your parents are). This is because an accident can cause your rates to rise substantially. This may seem intuitive, but it is important to understand why.
If you are involved in a collision, and you are at fault, your insurance company will assume there is a greater likelihood you will cause future accidents. These will result in claims your insurer must pay. Thus, they'll raise your premiums to compensate them for the added risk. Bottom line: drive safely.
Learn The Value Of Shopping Around
One of the best things you can do to help your parents keep their rates down is to compare quotes side by side from multiple car insurance companies. This will also help you keep your own premiums down when you move to your own policy. You'll be surprised by the difference in quotes offered for the same coverages from one insurer to the next. Comparison shopping is the only way to find the best package for the lowest price.
The Teen Driver's Guide To Car Insurance
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