How is the Average Car Insurance Rate Affected By Age?

Getting your first set of wheels is a rite of passage for millions of Canadians. However, new drivers often pay a hefty price for the freedom of driving — especially when it comes to insurance.

Here’s what you need to know about the average cost of car insurance by age, and the other factors that affect insurance rates for young drivers. The second part of this article discusses how this table was created using our insurance calculator. Keep reading to learn more, or get a quote now.

Does Age Affect the Average Car Insurance Rate?

While age does impact car insurance rates, it isn’t the only factor.

Overall, Canadians tend to pay lower insurance rates as they grow older, with several discounts applied between the age of 18 and 25, depending on the broker.

As Canadians age beyond their mid-twenties, insurance rates stay relatively low or may decline further (assuming they have a clean driving record) until around the age of 80, at which point there may be an age-related increase.

However, age is only one small part of the calculation. Car insurance companies consider many different variables — and drops in car insurance price often reflect other factors, such as a longer clean driving record, or buying a different vehicle. In addition to age, Canadian car insurance rates are affected by:

1. Factor 1Gender

   Men are generally seen as riskier drivers than women, according to the Insurance Institute of Highway Safety. On average, men drive more, wear seatbelts less frequently and are more likely to take risks, such as driving while impaired or speeding. As a result, men are more likely to get into crashes and sustain serious injuries.

   Insurance companies, on average, handle more claims — and more expensive claims — when a male motorist is involved. Therefore, men are charged higher rates to reflect this. Young male drivers, who already are likely to pay more due to various other factors, are particularly affected.

2. Factor 2License level

   Inexperienced drivers are more likely to have accidents, making them a bigger risk for auto insurance providers. The situation is complicated by the different licensing requirements by province, which makes it difficult to compare driver qualifications and insurance rates one to one.

   For example, the Insurance Corporation of British Columbia (ICBC) provides basic insurance for all BC drivers, and will grant auto insurance to citizens with a learner’s permit.

   Ontarians with a G1 license, on the other hand, generally can’t get insured as a primary driver — they have to be added as a secondary driver to their parent or guardian’s insurance. Fortunately, there typically isn’t an additional charge associated with this.

   If you’re from Ontario however, a G2 license might just cost you more money. Although it isn’t the primary factor insurance companies look at, a G2 license will generally increase insurance costs compared to a full G license.

3. Factor 3Driving record

   Certain types of tickets can have a major effect on your insurance rates. While non-moving violations such as parking tickets generally won’t be a problem, speeding tickets and other moving violations can raise your car insurance rates more than your age will.

4. Factor 4Insurance record

   Having a consistent record of ongoing car insurance can help you keep your rates low. Your insurance company will look at the length of your insurance record to help judge how much you should pay — something that you can’t help if you’re a younger driver.

   However, insurers also look for lapses in your coverage. Being added to your parent’s insurance while a student driver, then immediately buying insurance when you graduate to G2 (or your province’s equivalent) will tend to get you a better rate than going off and on insurance again.

   Young people, who have tighter budgets and higher insurance rates, are disproportionately affected by this.

5. Factor 5What vehicle you drive

   The Canadian Loss Experience Automobile Rating (CLEAR) system rates the risks your car poses from an insurer’s point of view. Your CLEAR ratings include vehicle safety factors (e.g. anti-lock brakes and airbags), risk of theft and other factors that lead to insurance claims. This can also work against young drivers, who are less likely to have the money to purchase new, safer cars.

6. Factor 6Where you live and drive

   The costs of car insurance vary tremendously from province to province, depending on the cost and frequency of claims, insurance regulations and other factors.

   For example, in 2015 Newfoundland and Labrador had a total claims cost of $852 per vehicle — much higher than Nova Scotia ($631) or Prince Edward Island ($519). Claims frequency is also higher in NL — 13.08 vehicles per 100, compared to an average of 10.7 among its neighbouring provinces. As a result, NL drivers pay considerably more.

7. Factor 7What level of insurance you chose

   All Canadian drivers have to buy a certain level of mandatory insurance coverage as specified by their provincial or territorial government.

   Additional insurance is a good idea, giving you better protection if, for example, you’re hit by an uninsured driver or you’re in an accident where it’s not clear which driver is at fault. However, better coverage comes with a higher premium.

Average Car Insurance in Ontario by Age

Because Average Car Insurance by age varies based on so many different factors, we created a sample driver. Our driver is a male, living in Toronto in the M4T 1W5 area code.

He received a general license when he turned 18, and drives a 2018 Toyota Corolla SE, purchased new in January 2018. His insurance coverage started one year before he received his general license. He has no traffic offenses, insurance lapses or accident claims. Here’s what he would pay:

As you can see, the average car insurance rate in relation to age goes down very quickly for our example driver. Between the ages of 18 and 21, the average rate goes down by over $100 per month every year. At the age of 25, the driver’s average rate is less than half of the lowest rate when they turned 18.

However, this is not an average driver in a lot of ways. First of all, our driver is a man. As mentioned earlier, women typically pay lower rates for car insurance, although the gap appears to be closing.

Additionally, our driver is driving a 2018 Corolla with no previous owners. Many young drivers don’t have the budget to buy a new car. An older, pre-owned car can raise insurance rates — particularly if it’s been in a crash. Even if the driver does own a new car, they certainly won’t be buying a new one every year. Over time, the age of the car will start to affect auto insurance rates.

Just as importantly, our driver is… well, a better driver than most of us. According to the Ministry of Transportation, Ontario had 9,932,211 drivers in 2016. However, census data shows that only about 74 per cent of Ontarians commute regularly to work as drivers.

The Ontario Provincial police handed out nearly 213,000 speeding tickets. If we assume that only about three quarters of Ontarians drive regularly, and those regular drivers are responsible for most of the tickets, then roughly one out of every 35 Ontario drivers received a speeding ticket in 2016. And that doesn’t count other kinds of moving violations, such as running a light or careless driving.

On top of that, many drivers have been in collisions. An Allstate study found a 7.33 per cent annual collision rate frequency for Toronto drivers from 2015 to 2017. Add on the chance the driver has a lapse in coverage or poor credit, and there’s a good chance that most of us are less ideal than our sample driver, which means higher coverage costs.

There are also factors that could affect cost that aren’t penalties. For example, the driver may have a second driver on their account, or may have opted for better Ontario vehicle insurance coverage, such as collision coverage to protect in accidents when it’s not clear who was at fault.

Getting the Best Car Insurance Possible as a Young Driver

The good news is, there are also things a real driver can do to get a better rate.

If they’re willing to have their driving monitored, they could opt for usage-based insurance. The insurance company will install a gadget called a telematic device that measures speed, acceleration and braking, time on the road and other factors to determine how safe they are.

For young drivers who are very safe behind the wheel, this can be a major source of savings.

Even if usage-based insurance isn’t for you, you may be able to get better rates by working with an insurance broker.

My Insurance Broker works with insurance companies to provide the most competitive pricing options available for young drivers.

Whether you’ve just received your G2 and need help navigating the maze of Ontario car insurance, or you’re an experienced driver looking for an insurer who won’t penalize you just for being young, we can help. Get a free auto insurance quote, or contact us either via Live Chat or at 1(855) 482-5001.