Car Insurance Primer For Teenage Drivers
Author: Kade Phillips
Canadians are able to apply for a driver's license when they reach sixteen years of age. Of course, there are rules in every province and territory that govern your freedom to do so. Some of these rules influence your car insurance rates, one of the most confusing aspects for most teens.
Many teenagers get help from their parents, and aren't aware of the car insurance rates they pay. 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. Many believe the minimum driving age should be at least twenty years of age. Rather than take that approach, most provinces have implemented a graduated driver's licensing program. While it may seem focused on teenagers, it is actually designed to introduce all new drivers to driving.
Every province and territory handles their program differently. Ontario has two stages before the standard G license. These are called G1 and G2. G1 drivers must drive without incident before they can graduate to G2. 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 beginning level, you're required to have an experienced driver in the vehicle with you whenever you drive. 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. Insurance companies have noticed that solo inexperienced drivers get into more accidents.
Why Car Insurance Companies Seem To "Target" Young Drivers
Many teens believe they're being treated unfairly by their insurance company. After all, premiums are much higher for young drivers. It's important to realize that insurance companies rely heavily on data when calculating rates. Statistically, teens are often involved in accidents, and these claims are often very expensive.
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.
Auto insurance is a part of life for many Canadians, and Kade Phillips helps demystify much of the confusion in this area. If you'd like to see how your auto insurance quotes are affected by your choice of vehicle please visit Kanetix today.