Guide to Car Insurance for New Drivers

*This article is updated from its original version published on Feb 13, 2021

Whether you’re a teen who just got your licence, have recently immigrated to Canada, or you’re an older adult getting behind the wheel for the first time, insurers classify you as a new driver. As a new driver, it’s important that you understand the rules of the road, including how car insurance works. 

Here’s everything you need to know about car insurance for novice drivers in Canada, including why insurance costs more, what type of coverage is available, and how you can reduce your insurance premiums. 

How does car insurance work for new drivers?

Car insurance for new drivers works the same as coverage for all drivers. The main difference is that premiums are typically higher for new drivers because insurers see them as a greater risk. 

When it comes to purchasing car insurance as a new driver in Canada, there are three different systems depending on where you live.

Private system: In a private market, coverage is sold by a private company. This applies in Alberta, Ontario, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, and the territories. 

Public system: British Columbia, Saskatchewan, and Manitoba use a public insurance system where basic coverage is sold by a Crown corporation. 

Hybrid system: Quebec uses a hybrid approach in which a Crown corporation provides mandatory injury coverage, while private companies sell liability coverage and additional options. 

Is car insurance required for new drivers in Canada?

Yes. In Canada, each province or territory sets mandatory minimum insurance amounts that all drivers must carry. 

For example:

In Alberta, drivers must purchase:

• $200,000 in third-party liability coverage 
• Direct compensation for property damage (DCPD)
• Accident benefits 

In Ontario, minimum coverage includes:

• $200,000 in third-party liability
• Accident benefits
• Uninsured automobile coverage. 

Requirements vary significantly between provinces, so make sure you check the details for your province or territory. 

If you’re caught driving without insurance, you can face steep fines, licence suspension, and vehicle impoundment. 

Is car insurance more expensive for new drivers? 

Yes, car insurance for new drivers is typically more expensive because insurers consider them a higher risk due to their limited driving history. 

Licensed Insurance Advisor Kathy Dang explains that many insurers use a 9-star rating system to help determine premiums. 

According to Dang, drivers who complete an approved driver’s education program may start with a 3-star rating, while those without recognized training are typically assigned a 0-star rating.

She notes that “for each year without claims, convictions, or payment defaults, a driver’s rating will increase by one star,” while incidents or missed payments can significantly reduce a driver’s rating. 

As new drivers gain experience and maintain a clean record, they can improve their rating and often qualify for lower premiums over time.  

How is car insurance calculated for new drivers?

A number of factors go into how insurance companies calculate premiums for new drivers, including: 

Age, gender and marital status. In most provinces, younger, unmarried men typically pay the highest rates. 

Driving history. Speeding tickets, at-fault car accidents, or a conviction for impaired driving can drive up your premiums. 

Type of vehicle you drive. You can expect to pay higher rates if you drive a car that’s more likely to be stolen or is more expensive to repair. 

Where you live. High crime rates, high population density, and a high risk of extreme weather events can increase your rates. 

How often you drive and how far. The more you drive, the more you can expect to pay for coverage. 

Type and amount of coverage you choose. Higher levels of coverage and more coverage options will result in larger premiums. 

Does insurance go down as you drive more and age?

You’ve likely heard the common adage that insurance prices start to go down at 25, and it’s largely true.

On average, car insurance rates go down as you get older and gain more experience, but it’s not a guarantee. Age is one of many factors that affect your insurance premiums. 

If you want to see your rates drop, focus on maintaining a clean driving record and comparing quotes from multiple insurers to find the best coverage at the best price. 

What type of insurance coverage is available to new drivers? 

As a new driver, you can choose from a variety of coverage options, including: 

• Third-party liability coverage: Mandatory in every province and territory, this covers medical bills and property damage to another person if you cause an accident. 
• Accident benefits coverage: Also mandatory, this protects you and your passengers regardless of who is at fault in a crash. 
• Collision coverage: Covers damage to your car if you're in a collision with another vehicle or object.  Since young drivers have the highest crash risk, this option is worth considering. 
• Comprehensive coverage: Helps protect your car from damage caused by something other than a collision, such as a hailstorm, theft, or hitting a deer. 
• Uninsured motorist coverage: Mandatory in many provinces, this covers you if you're hit by a driver who doesn’t have insurance, or if you’re the victim of a hit-and-run. 

Are there any special coverages that are important for new drivers?

If you’re interested in adding more specialized coverage options, here are a few types of insurance that are worth highlighting for new drivers:

Roadside assistance

As a new driver, you may be unfamiliar with what to do if you get a flat tire or run out of gas on a remote road. This is where roadside assistance coverage comes in handy. Whether you need a tow, boost, or gas delivery, you can call the 24/7 emergency phone number for help. 

Loss of use

This is an optional form of coverage that helps pay your transportation costs if you can’t use your vehicle due to a covered event. For instance, you get in a crash, and it’s going to take two weeks to repair your vehicle. Loss of use will help pay for a rental. If you rely on your car to get to work or school and don’t have money saved up to pay for a rental, you might consider this form of coverage. 

Usage-based insurance

If you don’t do a lot of driving, usage-based insurance (UBI) is worth exploring. Insurers use a telematics app to track information, like how far you drive and how safely. It monitors habits like hard braking, rapid acceleration, and time of day. Your premium is then based on your overall score. Safer driving typically results in lower premiums. 

Tips to get cheap car insurance as a new driver

Insurance premiums for new drivers can be expensive, but there are steps you can take to lower your costs:  

• Stay on your parents’ insurance. If you’re a teen driver, it’s usually cheaper to be added as an occasional driver on your family’s policy than to purchase separate coverage. 
• Take a defensive driving course. Some government-approved driver training programs can help you qualify for an insurance discount, lowering your premiums.
• Ask about student discounts. Many insurance companies offer student discounts such as the “good student discount” that reduces your premiums if you can maintain a certain grade average. If you attend school away from home and only drive when you’re back visiting, you might qualify for the student-away-from-home discount. 
• Choose the right deductible. Choosing a higher deductible usually results in lower monthly premiums. But make sure you can afford to pay the deductible amount should you need to file a claim. 
• Get the right vehicle. To keep costs down, look for a car with good safety ratings, lower theft rates, and reasonable repair costs. 
• Compare multiple quotes. Rates can vary widely between insurers, so get quotes from multiple companies before making a decision.