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Few experiences are as thrilling as the rush of getting your driver’s license. Now it’s time to hit the open road — after you take care of all the responsibilities that come with driving, that is. Driving comes with its own set of expenses. Loans or lease payments, gas, and of course, car insurance. The cost of car insurance in Ontario for new drivers can come as a shock, but the price is carefully calculated. Instead of being shocked by a quote for car insurance, you should learn about how Ontario car insurance actually works and why it costs what it costs.

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What Affects The Cost of Car Insurance in Ontario?

Learning what impacts the cost of car insurance in Ontario can help you avoid potentially costly pitfalls. It’s actually fairly straightforward. The insurance agencies assess different factors based on the risk they carry. Analyzing these risks gives the insurance company the information they need to price your insurance plan. Among the many factors are: 

Age and Gender

These basic details include your age and your gender. By using years of historical data regarding vehicle safety and incident reports, the insurance company uses these factors to set a baseline insurance calculation. It’s widely known that insurance for those under 25 years old is much more expensive, often by as much as 20 percent. Those over the age of 69 are deemed a higher risk, based on data that drivers aged 30 to 69 are less of a risk. 

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Location of Residence

The insurance company wants to know where you live because the baseline cost of insurance differs by location. The idea is that, if you live in a crowded city area, prone to gridlock, you are more likely to encounter an accident and make a claim. Conversely, less congested rural areas have lower starting rates. Based on your postal code, the insurance company can see the prevalence of vehicle theft, vandalism, and claims in the area. This is used to assess baseline risk and serves as a starting point for your policies.

Marital Status

Years of accrued data showcases that married couples are less of a risk for insurance companies, including those who are either divorced or have lost a spouse. Because of this, car insurance rates for married individuals are usually up to 15 percent less than those of their single counterparts. Also, married couples can get discounts by combining policies. 

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Driving Experience

This is the biggest issue faced by new drivers because, naturally, they don’t have a proven driving history. Because drivers with less experience are a higher risk, those who have not had insurance before always pay more for insurance. While new drivers are always more of a risk, older individuals just beginning to drive are likely to pay a lower amount than a teenager just getting their license because of the maturity factor in risk assessment calculations. 

Driving Record

You might have been driving for ten years, but if you made numerous insurance claims and have demerits on your file, then you are looking at much higher insurance costs. In fact, the biggest increases in the rates of car insurance occur when you have incurred motor vehicle violations. The company looks at the history of claims you’ve made on previous insurance policies, including those when you were at fault and when you weren’t. The more claims you make, the more risk you pose to your car insurance company.

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Type of Vehicle

Driving a bright red convertible with a spoiler suggests a different drivers’ personality than a compact black SUV. Insurers look at data related to the type of car to assess the frequency of theft, the price of repairs, and how common accidents are. It looks at the tests performed by manufacturers to determine the safety and factors this into the price of your insurance policy. 

Vehicle Condition

This is a factor for consideration when you are driving a pre-owned vehicle. Cars with higher mileage are more likely to incur mechanical issues and the insurance company takes this into account. As a result, if you are driving an older vehicle model or one with a history of damage, then you can face higher insurance rates. 

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Coverage You’re Getting

In Ontario (and the rest of Canada), it is mandatory to have active insurance in order to drive a vehicle. However, not all insurance plans are made alike. You can get a basic insurance policy that provides liability protection without getting all the bells and whistles on your insurance. That said, the decision to scale back your insurance is a double-edged sword. A low monthly fee for basic insurance means a high deductible and little financial protection in the event of an accident. A more comprehensive plan with a lower deductible will have a higher price tag, but give you more security. 

Factors Beyond Your Control

Though being a new driver is a big factor in the pricing of your insurance, there are some considerations taken by the insurance agency which are out of your hands. These include:

  • Weather: You can’t control the weather in Ontario; and, especially with the snowy winters and extreme cold, it can mean paying more for insurance. 
  • Crime rates: If your area has undesirable crime statistics, then issues like vehicle theft and vandalism are more likely. To mitigate that financial risk, insurance will charge you more for a policy. 
  • Inflation: Another thing outside of your purview is inflation. Over time, money is worth less. One dollar simply doesn’t stretch as far as it used to, so insurance companies need to account for this by factoring in this extra cost.

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What is The Average Cost of Car Insurance in Ontario vs. Canada? 

With so many factors related to the region, it’s only natural that the cost of car insurance varies based on the province in which you reside. There are substantial differences in the cost of insurance across Canada: 

Annual Insurance CostMonthly Insurance CostReason
Canada$1,030$85.88Average of the provinces’ insurance costs.
North West Territories$1,000$83.33Low population density balanced against limited claims.
Yukon$812$67.67Infrequent claims and lawsuits versus the limited population. 
Nunavut$963$80.25Low population and higher-risk roads paired with the limited claims against insurance. 
British Columbia$1,680$140Public insurance aiming to break-even. Insurance rates are projected to increase. 
Alberta$1,251$104.25Private insurance options. Road collision statistics contribute to high premiums.
Saskatchewan$936$78Public insurance is the only option available. Fluctuates every year.
Manitoba$1,080$90Public insurance system. Rates fluctuate every year. 
Ontario$1,445$120.42High rates of fraud, crime, and lawsuits lead to insurance premium increases. 
Quebec$642$53.50No-fault system reduces liability. Private and public options. 
New Brunswick$819$68.25Low rates due to limited claims made against the insurance companies.
Nova Scotia$842$70.17Low number of claims compared to Canada overall.
Newfoundland/Labrador$1,132$94.33Increase in lawsuits led to rise in premiums.
Prince Edward Island$796$66.33Private market competition and few annual claims

The cost of insurance is based on the frequency of claims, the population, and multiple other factors. Quebec, the province with the most affordable insurance, offers a choice between public and private providers. Ontario, the province with the costliest insurance, has one of the highest crime rates, a major contributing factor. These are average rates across the province, so there is still room to save on insurance wherever you reside. 

Insurance Rates For New Drivers in Ontario

New drivers will always end up paying higher premiums for two main reasons. For starters, the best way to save is to prove that you are low risk (and the only way to do that is with a driving record). Those new to the road won’t have this track record and must prove themselves before accessing any discounts. 

Generally speaking, new drivers are under the age of 25. Since, historically, this demographic is the most likely to suffer collisions, insuring them is more expensive. Even if you take advantage of all the possible incentives and rates, without a proven record of safe driving, there is no way to highlight that you are low risk. As a result, one way or another, new drivers below the age of 25 will pay higher premiums. 

Check out how you can save money on your car insurance.

How do You Reduce Car Insurance Rates as a New Driver?

The good news is that, while you can expect higher premiums as a new driver, there are still steps you can take to limit the expense. Naturally, the main thing to do is drive safely and pay your insurance premiums on time. Other potential steps include:

  • Adjusting your coverage: Weigh your insurance options by taking a close look at your policy. Check if you can scale back your coverage to the legal minimum. Many plans also offer the option of paying a higher deductible and a lower monthly rate.
  • Add yourself as a second driver: Especially if you are under the age of majority, ask your guardians whether you can get added to their policy. Instead of facing the hefty fees of being the primary on the insurance, you can gain driving experience, stay covered, and pay less. If you are getting your license later in life, you may be able to get named as a second driver on your spouse’s account. 
  • Look out for student discounts: If you are enrolled in a post-secondary institution, there may be insurer-provided discounts. It is more common amongst private insurers than public insurance agencies run by the province. Similarly, your school may offer alumni discounts, so check if any of these apply to your situation. 
  • Take supplemental training: Often, if you take a driving course through a recognized program, you become eligible for a car insurance discount. The idea is that you learn defensive driving strategies to keep you safe while on the road, thus reducing the risk you pose to the insurer. 
  • Get your license as soon as possible: Finally, the best way to get savings sooner is to start early. By taking your driver’s test as soon as you become eligible, you will be able to prove yourself as a safe, low-risk driver sooner. This way, by the time you reach the age of 25, you will have access to the best insurance rates available. 

New Driver FAQs

What’s the difference between a G1 and a G license? 

In Ontario, the car license process has three levels: G1, G2, and G. A G1 license comes with restrictions for new drivers, with a view to fostering safe driving habits. Drivers with these licenses must be with a G-licensed driver in the passenger seat. G1 drivers cannot ride on expressways, or between midnight and five in the morning.  G2 is the next step up, letting drivers practice with the license for a year without requiring another driver in the vehicle. There are additional restrictions for G2 license holders under the age of 19. The final step is the G license, one free of caveats. 

Do I have to get car insurance in Ontario?

Yes, having car insurance is mandatory. In order to register your vehicle, you must show proof of insurance. This covers you against third-party liability, incidents with uninsured automobiles, property damage coverage, and benefits in case of an accident. You can get additional coverage that is more comprehensive. 

Will my insurance reduce when I graduate from a G1 to a G2?

Upon graduating from a G1 license to a G2, you can expect your insurance premium to reduce by approximately 10% (so long as you have a good driving record). You can expect another price reduction of the same amount when you graduate to a G license. 

Final Thoughts

The best way to reduce the cost of car insurance as a new driver in Ontario is to plan ahead. Getting your license as soon as possible and keeping a spotless driving record, sets you on the path toward lower premiums. In the meantime, keep an eye out for discounts, try to get a lower-risk vehicle, and follow the rules of the road to the letter. It’s expected for new drivers to pay higher premiums, but by following the proper protocol, you can get savings sooner.

Corrina Murdoch avatar on Loans Canada
Corrina Murdoch

Corrina Murdoch has been a dedicated freelance writer and editor for several years. With an academic background in the sciences and a penchant for mathematics, she seeks to provide readers with accurate, reliable information on important topics. Working as a print journalist for several years, Corrina expanded her reach into the digital sphere to help more people gain insight into the realm of finances. When she's not writing, you can find Corrina swimming and spending time with family.

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