First-Time Car Insurance for Canadians

Congratulations on your new car. It looks, feels, and drives great and is the envy of all your friends. To keep it looking great, make sure it is adequately insured against life’s many unexpected events. If you have an outstanding auto loan, the lender will require full coverage. Even if your pride and joy is fully paid for, Canadian law mandates that you have a minimum amount of liability coverage.

First-Time Insurance is Costly

Without a prior track record, you are a heightened risk for insurers. It is akin to the first time you applied for credit. The provider has no way of knowing how you will perform. To minimize their loss exposure, they assume the worst.

Other Factors Play a Role

Time is the only cure for an unproven driving record. Other factors are within your immediate control. These include:

1) The Type of Car you Drive

Just as insurers price premiums upon individual driver characteristics, the characteristics of specific types of cars are similarly compiled. Accident safety records, replacement values, and incidence of theft vary greatly among classes of vehicles.

2) Your Deductible

When there is a claim, this is the initial amount you will have to pay out-of-pocket before your insurance kicks in. The higher your deductible, the lower your premium.

3) Coverage Limits

By Canadian law, you must carry a minimum amount of liability coverage. This protects other parties who sustain damages in accidents wherein you are deemed at fault. The higher your coverage limit, the higher your premium. If you choose $50,000 liability coverage, you will pay more than you would for a policy which provides only $10,000 coverage.

4) Your Carrier

Premiums differ substantially among insurance companies. Different carriers may have differing marketing objectives at various times. Their current policyholder base may be deficient in certain demographic characteristics at a given time. This may lead them to solicit business among drivers whose profiles include those characteristics. Accordingly, they may offer discounts to encourage these consumers’ patronage.

Despite being a first time driver, you may still qualify for discounts:

  • Multi-line discount – if you carry health, homeowner, or life insurance with your auto insurer;
  • Anti-theft discount – may be obtained by installing anti-theft devices;
  • Low mileage discount – if you drive your car relatively infrequently;
  • Occupational discount – if you work in certain jobs or hold a certain academic degree;
  • Auto club discount – for membership in clubs such as CAA, etc.

Be sure to inquire about any discounts you may qualify for. Even if you incur some expense for anti-theft devices, auto club membership, or driver improvement courses, your premium savings may be several times the cost. With advance planning and wise selection of your policy and carrier, you can be well on your way to substantial auto insurance savings. Enjoy the trip!