Young drivers are paying more for car insurance in the United States and Canada. This statement is not an exaggeration but a fact that can be proven. In the United States, young men are more likely to pay 14% more for their insurance coverage. As they get closer to their mid-20s, the gap in rate will decrease. Unfortunately, there is a period of seven years, where these drivers are exposed to higher rates. Young drivers in Canada are also labeled with the “high-risk” driver nametag on an insurance policy. If you are 25 years of age or younger in Canada or are a first-time driver, the lack of experience can cause policy increases.
Young and New Drivers - 6 Pro Tips To Lower Your Car Insurance
How Car Insurance Premiums are Determined
A lot of calculations go into determining car insurance rates. The real kicker in the situation? Not all insurance companies follow the same parameters when determining their rates. This is why shopping around for insurance, especially with young drivers on the policy, becomes crucial. Not every one of these parameters can be controlled – you can’t change your age or your current credit score.
When you go online to get a quick quote, you asked for the following: 1) name, 2) address, 3) birthday, 4) gender, 5) make, model, and year of the car and 6) how often you drive your car. These are just preliminary questions. From this, the company can provide an initial quote on the car insurance premium. Once more individualized information is obtained, the quote can be personalized (social security number, driving record, etc.).
The area you live in (city, cul de sac, rural, etc.) can determine the risk of vandalism.
Busier cities tend to be at higher risk for claims due to vandalism. The same applies to claims for weather damage and cars not kept in a covered space. The on- or off-street parking matters too.
Age is not just a number – it is a dollar sign.
When you are a young driver, you are likely to be looked at under the microscope. Young drivers are likely to get a better rate if they have taken a United States driver’s training class or a government-approved driving program in Canada. Unfortunately, higher rates are something that young drivers may have to combat until they turn 25.
Both the United States and Canada agree that women are less likely to end up in an accident, drive under the influence, and have less serious accidents. Unfortunately, men, especially those who fall into the category of a young and high-risk driver, will pay more for their insurance policy. As the young driver gains experience and a positive driving and insurance history, this can change.
The car you drive plays a significant role in your insurance premium as well.
Image source: Nissan Canada
Some cars are considered safer for young drivers. Other variables that the company might look at about the car are the risk of theft, the cost of repairs for that particular make and model, and the vehicle’s overall safety.
How many times have you looked at a car on the road and said, “I bet that goes fast!” That is what the insurance company is doing when they find out your vehicle’s make and model. Some cars are considered lower risk to insure than others. This is why putting a young driver behind a five or more year old vehicle will reduce costs than in a brand new model.
The more you drive, the more you are at risk of being involved in an accident. The insurance companies look at the mileage that will be put on the vehicle each year to determine the chances of a claim being filed.
Tips for Young Drivers Looking to Reduce Auto Insurance Rates
With insurance premiums remaining high until at least the age of 25, there are other things that young drivers can do to try and offset the prejudice against their age in the insurance industry. These tips can also be used for anyone 35 years of age and younger who want to find a way to decrease their car insurance.
1. Get the right kind of car
Image source: Honda Canada
Your car creates a huge impact on your premiums. Here are some of the more reliable and lower coverage cost cars:
- Honda CR-V
- Toyota Tacoma
- Ford Explorer
- Nissan Sentra
- Hyundai Elantra
Some cars are just more expensive to insure due to their features or tendency to be used as a racing vehicle. Luxury cars are expensive because fixing them costs more money.
2. Take a driving course
These courses can help reduce premiums because drivers are taught preventative measures for accidents and also the other safety concerns that people face on the road. It is worth looking into because drivers who take a course can see a significant discount percentage on their insurance premium.
3. Bundle insurance
You hear the commercials “bundle your home, auto, and boat insurance.” The reason that this is pushed is that by having multiple policies through one provider, you can save money. You are also saving the insurance company money by having more than one policy with them – it is a win-win situation all around.
4. Increase your deductible
Depending on the insurance coverage you have, there will be different deductible thresholds to choose from. The deductible on a policy is the amount that you have to pay before insurance coverage pays anything. If you have the extra money, you can increase your deductible amount and lower your premium.
5. Shop around
We already discussed insurance companies looking at various parameters when determining car insurance premium pricing. Since not every company looks at the same parameters, it is worth getting quotes from more than one provider. If you are in British Columbia, to find the best pricing you will have to seek a broker who will be more knowledgeable on the various aspects of car insurance policies – they may be able to save you some money!
6. Invest in a dash cam
While it may not cause a whole lot of change in your premium directly, it may indirectly help by proving fault in an accident. Some models even have a two-way recording for monitoring the driver and the road at the same time. Many great entry-level models may work for these purposes, Thinkware FA200, BlackVue DR590X, VIOFO A129 Duo, and many more – some priced below $200!
Understanding Insurance Coverage Types
Car insurance coverages can be broken down into different categories, each one covering a different area. You have probably heard of liability (minimum coverage) and full coverage, but the types of insurances available have increased to include pay as you drive coverage types.
Liability Coverage - Liability coverage is also considered to be the absolute minimum coverage required by law. This rule is true in both the United States and Canada. However, some of the limits may vary between states, provinces, and countries.
Comprehensive Coverage - Comprehensive coverage can be misleading – it does not cover ALL damages to the car. It does cover damage from weather anomalies like hail, fire, theft, and vandalism. Consider it “everything but an accident coverage.”
Collision Coverage - Collision coverage is what will pay for the repairs to your vehicle after the deductible has been satisfied.
Uninsured/Underinsured Motorist Coverage - These coverages are not mandatory in most states, but it picks up where the other driver’s insurance (or lack of) left off, covering your expenses in an accident caused by someone else.
Medical Payments Coverage - These coverages are not mandatory in most states, but it picks up where the other driver’s insurance (or lack of) left off, covering your expenses in an accident caused by someone else.
Pay as You Drive - One of the newest forms of insurance on the market, this uses a smart box device in your car to track driving habits such as acceleration, braking, hard turning, and time of day driving occurs. Most insurance companies require that these smart boxes be used for a period of 90-days, during which time a premium will be assigned to you. At the end of the 90 days, your premium will be adjusted to reflect the box’s results. The premium could go up or down, depending on your driving habits.
You Can Lower Your Young Driver’s Insurance Policy – With Time
Whether you live in Canada or the United States, there is always an opportunity for you to work on reducing your young driver’s car insurance policy. The one thing you must understand is that it won’t happen overnight, so be patient and use the tips to start building up your experience behind the wheel. If it wasn’t obvious, car insurance companies look at experience equalling a better driver. Using as many opportunities, such as discounts, we can help our young drivers get the lowest coverage possible. At the same time, they build up their roadway experience.