How young drivers can get best rates

Congratulations! You have your driver's licence and you have a car. The question is: can you afford insurance?

For many young drivers, automobile insurance – which is required by law in Canada – may well prove to be too expensive.

High insurance rates for young drivers reflect the fact that lack of experience, driver immaturity, less developed vehicle control skills, poor hazard perception, peer influence and reckless behaviour have repeatedly proven to be a lethal combination.

"Statistics tells us that drivers aged 16 to 24, though they only represent 9 per cent of the driving public, they also represent 25 per cent of the road fatalities and serious injuries." explains Peter Warner of the Insurance Bureau of Canada.

"Drivers aged 16 to 19 have a fatality rate that is four times that of drivers aged 25 to 34 and nine times that of drivers aged 45 to 55. The stats are very astounding."

Young drivers looking to lower their car insurance bills should shop around, including researching online, advises Anne Marie Thomas, account manager with insurancehotline.com, adding that there are a number of other things drivers can do to lower their costs.

Attending an accredited driving school usually results in an insurance discount. The Ontario Ministry of Transportation lists approved driver training education courses at www.mto.gov.on.ca.

Bundling insurance needs (auto/homeowners/tenant package) with one insurer can result in savings. Likewise young drivers using the same company as their parents often receive a discount.

The make and model of the vehicle will affect insurance costs. While cars with factory-installed safety features, and even some hybrid cars, may be cheaper to insure, expect higher rates for high-end, modified and sports models, as well as vehicles known to be targeted by thieves (see "How Cars Measure Up" and "Top 10 Stolen Cars" at the Insurance Bureau of Canada's site www.ibc.ca).

Investigate various coverages and deductibles. Consider that in some cases collision premiums may prove more expensive than the actual worth of the car. Higher deductibles may lower your premium but can also result in higher costs to you in the event of a claim. And switching to seemingly cheaper insurance midway through a policy's term may result in the cancellation fees negating the potential savings.

Ask about student discounts. Some companies reward good grades, while university students who are away at school much of the time (minimum distances apply), yet remain insured as occasional drivers on their parents' policy, can get a substantial price break. Conversely, parents who list their children as named drivers on their auto policies might consider signing an excluded driver endorsement for certain cars on their policy.

Do the math. Compare any service fees for monthly payment programs on annual premiums to paying in full for a six-month policy, noting that with shorter policies rates may rise upon renewal.

Installation of approved anti-theft devices, such as immobilizers and tracking devices, may result in discounts – but they apply only to the comprehensive portion of the policy, not the entire premium. Compare costs to actual savings.

Pay insurance bills on time. Rates can increase if there are gaps in coverage or a history of nonpayment cancellation. A good credit history can also help lower premiums.

Maintain a clean driving record. No tickets, charges, accidents or other claims can translate into a no-claims discount.

When applying for insurance, it's crucial to fully inform your insurance company about who the principal drivers are, and who are the occasional drivers, says IBC's Peter Warner. "By not doing so, an insurance company can cancel the insurance for `material change,' or deny a claim."

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