Are you a new and young driver anticipating the joy of riding around in your car this summer? One absolute must-have is car insurance.
The cost of car insurance for young drivers under the age of 25 is very high. A young male around 20 years old in Ontario with a clean driving record would be required to pay about $1,396 for a Honda Civic DX 2-door coupe clocking in at about 15,000 km per year.
Getting the right insurance for your car requires casting the net widely. You need to scratch below the surface to find the right company and the best policy for you. It’s also useful to know a few tips that can help you ferret out special offers from your insurance company. Here is some of the best car insurance advice for young drivers.
1. Select a relatively cheap car for lower insurance rates
When you set out looking for a car, it is important to know that its value will be an important factor in defining the cost of insurance. Very expensive, fast, and fancy car models attract high insurance charges. To enjoy lower rates, you could go for a cheaper model or buy a used car in Ontario.
Note that many cars lose over 40% of their value in the first three years. This implies that their insurance will be equally low if you purchase and insure a 3-year-old used car.
2. Don’t assume that liability coverage is always the cheapest option
In Canada, there are three main types of insurance coverage: comprehensive coverage, collision insurance, and liability/third-party coverage. Logically, third-party coverage is expected to be the cheapest option for young drivers in Canada because the level of coverage is smaller compared to comprehensive coverage. This is not always the case, however.
Insurers hold the view that those who go for third-party coverage are higher risk parties compared to those seeking comprehensive coverage. Note that costs could differ among selected insurance companies. Consequently, don’t make the blanket conclusion that liability coverage is automatically the cheapest option.
3. Go for telematics (black box policy)
Telematics involves installing a small device or application that monitors driving behavior and car usage. This kind of policy helps to pull down the cost of car insurance for a young driver because the insurer can calculate the insurance cost based on actual driving behavior as opposed to assuming the risk of the driver based on generalized statistics alone.
4. Pay the insurance premium yearly
Because car insurance coverage for young drivers in Canada runs into thousands of dollars, it can be very tempting to consider staggering payments throughout the year. However, paying the premium on a monthly basis attracts interest charges that can substantially raise the overall cost of the insurance. It will, therefore, be cheaper to pay the coverage yearly.
5. Consider adding a second and highly responsible driver
When you add a second driver, the expectation is that the cost of insurance will go up. Interestingly, it lowers the cost. That’s right. As a young driver, you are automatically tagged as a high-risk party. However, adding a second or third low-risk driver helps to pull down this cost. Note that the second driver should be a person who has a proven driving record. Remember that you should not add a person who is not a driver or a parent because doing so can attract hefty penalties.
6. Avoid car modifications
Young people have a special preference for car modifications, especially those that make them look fancy. When you pimp your ride, though, it raises the insurance premium by a significant margin. If you do decide to modify your car, it’s important to ensure that the replaced parts are of the same value. You should also notify the insurance company of such modifications.
7. Go for the right deductible without draining all the savings
To lower the cost of insurance, it is advisable to look for a policy that provides for a higher deductible. Opting for a higher deductible shows that you are committed to being extra careful on the road and that can help to lower the cost of your premiums. Note that you must be able to afford the to pay the deductible if you ever need to make a claim. Remember to make checking the deductible amount your first priority when insuring your car in Ontario.
8. Never lie to your insurer
The insurer is like a doctor. The golden rule when insuring a car – or any property, for that matter – is to tell only the truth and the whole truth. Knowing about the different things that push up insurance costs can make it tempting to lie in order to get lower premiums like indicating the wrong value, for instance. Note that giving incorrect information is considered fraud. In some cases, the insurance can be invalidated and criminal proceedings initiated for driving a car without insurance.
9. Shop around for the best company and policy
Though insurance policies might look similar in many aspects, take a closer look and a lot of differences will be discovered. Insurance companies, like other business, have different operational models that target lowering cost of operations and optimizing profitability. Here, you need to look for the company that is flexible and makes the process of making a claim simple and easy. Make sure to ask for quotes from several companies and compare them to select the one that fits your situation.
10. Demonstrate you are a low-risk party
The bottom line to insurance is risk. If you show you are a low-risk party, your insurance company will pull down the premiums. You can do this by driving safely, having no claims, and no points on the insurance. When the time to renew the policy comes, the premium will go down significantly. Low mileage on your car shows that you drive less through low mileage, something that also brings down the cost of insurance.