Car Insurance for New and Young Drivers

Getting a driver’s licence in Canada

To be a legal driver in Canada, you need a driver’s licence issued by your province or territory. It allows you to drive anywhere in the country — as long as you have it with you whenever you’re behind the wheel. 

How do you get a driver’s licence in each province or territory? 

Each region has its own set of rules for earning a driver’s licence. Age requirements vary — in Alberta, teens as young as 14 can get a learner’s licence — but in most provinces you need to be at least 16 years old to begin the process. 

Most provinces and territories have a graduated licensing program, which is composed of two to three stages that drivers must pass before earning a full driver’s licence. Requirements can include:

The graduated licence process in Ontario

To start the driver’s licence process in Ontario, you need to be at least 16 years old, pass a vision test, and a written test. 

Before you can get a full G licence, you must complete two learning levels: G1 and G2, and pass two road tests. You have up to 5 years to finish the whole process. After 5 years, you’ll have to start over. 

What can you do with a G1 licence?

Once you  have passed your vision and written tests, you will earn your G1. According to the Ontario government, when you have a G1 licence, you must:

•  Maintain a zero blood alcohol level
•  Make sure every passenger wears a working seatbelt
•  Avoid driving between midnight and 5 am
•  Avoid driving on 400-series highways or high-speed expressways
•  Drive with a fully licensed driver who has four years’ experience and a blood alcohol of less than .05

In most cases, you’ll need to practise with your G1 licence for 12 months before becoming eligible to take the G2 road exam that tests basic driving skills. How-ever, if you complete a government-approved driver education course, such as a program from Young Drivers of Canada, you can take your first road test after eight months. Either way, if you pass, you’ll get a G2 licence.

What can you do with a G2 licence?

As a G2 licence holder, you can drive:

You still need to maintain a zero blood alcohol level and carry only as many passengers as working seatbelts. 

Drivers under 19 years old may only have one passenger who is 19 or under between the hours of midnight and 5 am during the first six months of holding their G2. After six months, you can drive with up to three passengers under 19 between midnight and 5 am. These conditions don’t apply if you have a fully licensed driver in your car with four years’ experience or if your passengers are immediate family members, such as siblings.

After 12 months, you can take the G road test, which covers more advanced driving skills, including highway driving and parallel parking. If you pass, you’ll have a full G licence, which authorizes you to drive a car, van or small truck on any roadway, with or without passengers. 

What about driving school?

Taking driving lessons from a government-approved driving school will help you develop the skills and habits you need to be a safe, confident driver. 

Another plus is that it usually decreases auto insurance rates. Many car insurance companies will offer savings of up to 5 to 15% when you complete a driver education program from a government-approved organization. 

What about insurance in Ontario? 

Whether you have a G1, G2 or a full G driver’s licence, you need to be properly insured to drive a vehicle in order to protect you, your car and other vehicles, property and drivers in the event of a collision.

G1 drivers’ insurance

If you’re the parent of a teen driver who is using your insured vehicle to practise, you can simply add a secondary G1 driver on your auto insurance policy. The G1 driver can’t drive on their own so most insurance companies allow them to be added at no extra cost. 

If you’re an adult new driver, you may be able to become a secondary driver on the auto insurance policy of a spouse, family member or friend. It’s not likely that an insurance company would provide auto insurance to a person who has a G1 licence.

G2 drivers’ insurance

Since G2 drivers have fewer restrictions, they will need to be insured with their own policy or as part of an existing auto insurance policy. Unfortunately, if you’re under 25, the insurance rate will be considerably higher than if you are an older new driver. Insurance companies base their rates on a number of factors, including the likelihood of a driver getting into an accident. Young drivers account for a quarter of all accidents that result in injury or death and insurance rates typically reflect this risk.

How can I get better insurance rates as a G2 driver?

As a new driver with a G2, you’ll pay higher insurance rates than you will as a more experienced driver. But you have ways to get a lower rate:

•  Take a driver’s education course. Most insurance companies offer a better rate if you can prove you’ve completed training from a Ministry-approved driving school.

Possible auto insurance discounts for new drivers

You may be eligible for discounts that could help you reduce your auto insurance rate. Here are a few to look into:

•  Multi-vehicle. If you have more than one car in a household, you can bundle them together.
•  Winter tires. Some insurance companies offer a discount for having winter tires on all four tires during winter months. 
•  Graduated licensing. Onlia offers a discount for the first year after new drivers have been licensed. 
•  Home and auto. If you have both policies with one insurance company, you’ll likely get a discount on both.
•  Full-time college or university student. Some companies offer a dis-count if you’re enrolled in a post-secondary program or you’re a recent graduate under 25 years old.
•  Telematics. Some insurance companies offer discounts if you give them permission to monitor your driving habits. Onlia offers rewards and cash-back as part of the Onlia Insurance™ app.

Buying your first car

For many teenagers, buying a car is high on the list of things to achieve before they turn 20. For new drivers who are older, purchasing their own car may be exciting — or simply a necessity to get to work or school. No matter the reason you’re doing it, investing in a car is a big deal that requires a lot of thought.

Can you buy a car if you have a G1 or G2 licence?

There’s nothing stopping you from purchasing a car if you don’t have a full G licence, but you won’t be able to insure it properly until you have at least a G2 designation.

Things to consider when buying your first car

Matching the right car to the right budget and lifestyle is crucial. Here’s what to think about:

•  Budget. Although the cost of the car is an important figure, it’s not the only price associated with owning a car. Don’t forget to factor in fuel, repairs and insurance.
•  New or pre-owned? While used cars are generally significantly cheaper, you have to ensure they’re reliable. 
•  Automatic or manual? Most cars in Canada have an automatic trans-mission, but you could save a few bucks if you want to drive a manual.
•  Size and carrying capacity. Do you need a small car to get you to work and back, or will you be transporting family and friends? Narrow down the search by choosing the right size. 
•  Fuel economy. How much of a budget do you have for gas? How many kilometres do you expect to travel in a year? Do the math before you make an investment.
• Safety features. An older-model car without adequate safety features like airbags or brake assist may be cheaper to buy, but you could end up paying more in insurance. Commonly stolen makes and models are also more expensive to insure.

Insurance considerations when buying your first car

All registered vehicles must have insurance in Canada. In fact, you won’t get a licence plate until you have shown proof of insurance. 

The cost of insurance should figure into your buying process. If you’re looking to keep costs as low as possible, consider: 

• Checking with the Insurance Bureau of Canada to see how collision and other claims affect the cost of auto insurance for particular makes and models of cars. 
•  Looking at the Insurance Institute for Highway Safety’s annual analysis of the safest cars to drive. The safer the car is considered to be, the lower the insurance rates should be. 
•  Choosing a slightly older model with up-to-date safety features.
•  Getting a quote on a few different vehicles to see what the insurance costs would be for each before you buy. 
•  Considering a midsize or large car instead of a small car. Heavier vehicles are thought to provide more protection, so they are cheaper to in-sure. (However, if you don’t need a large vehicle, the cost-savings of buying and fuelling a small car may outweigh any insurance discounts.)
•  Looking for crash test ratings and theft deterrents. The higher-rated and harder to steal they are, the better rate you’re going to get on insurance. 

Getting to the finish line

Earning your driver’s licence and buying your first car are momentous mile-stones in any person’s life, no matter how old you are. 

It’s important to familiarize yourself with the licensing process in your province and work your way carefully through each step, including taking driver’s education classes to ensure you have excellent skills and habits on the road.

And when it’s time to buy a car, it pays to do some research and think about all the costs associated with vehicle ownership. It may feel like a lot of work, but it’s worth every moment.