How Does Car Insurance for Teens Work? Best Options + Free Quotes

Welcome to the world of car insurance for teens in Canada! Ever wondered why it seems like insuring your teen driver costs an arm and a leg? Well, you're not alone. 

Dive into the nitty-gritty of how teen insurance works with us, what factors drive up those premiums, and most importantly, how you can save on premiums while keeping your young driver covered. 

You can also use our free tool to compare the best car insurance options based on your unique needs and get personalized quotes right here.

Is there car insurance for teens in Canada? 

Yes, there is car insurance for teens in Canada. It's just typically more expensive than for experienced drivers due to the higher risk associated with young drivers.

Here are your options:

• Teen as an occasional driver: In many cases, you can add your teen with a learner's permit (G1) to your existing policy as an occasional driver, often for free. This works as long as they aren't the primary driver of the car.
• Teen as primary driver: Once your teen gets their full license (G2 or higher) and can drive independently, they will need to be listed as a driver on your policy or get their separate policy. This will likely result in a significant increase in your premium.

If you're looking for car insurance for your teens, we suggest you compare different plans before buying any policy. It'll help you save some money — teen car insurance is already expensive.

How does car insurance for teens work?

Car insurance for teens in Canada works a little differently than for experienced drivers due to the graduated licensing system in most provinces.

Most Canadian provinces have a graduated licensing system with stages that teens progress through before obtaining a full license. This system helps young drivers gain experience in a controlled environment.

1. Learner's permit (G1): At this stage, teens can only drive with a licensed adult supervisor in the car. They typically wouldn't need separate insurance as they're covered under the supervising adult's policy.
2. Probationary license (G2): After completing the G1 stage, teens can get a G2 license which allows them to drive independently under certain restrictions (e.g., nighttime curfews, passenger limitations). At this point, they might be added as an occasional driver to their parent's policy, though it can significantly increase the premium.
3. Full license: Once teens meet all the requirements and have enough experience, they can obtain a full license (varies by province). This allows them unrestricted driving privileges. They may remain on their parent's policy (increased premium) or get their separate policy.

How much is car insurance for teens?

It's difficult to give an exact amount for car insurance for teens in Canada as the cost varies depending on several factors, such as:

• Province: Insurance regulations and rates can differ between provinces.
• Location: Urban areas typically have higher premiums than rural areas.
• Age: The younger the driver, generally the higher the cost.
• Driving experience: Less experience leads to higher premiums.
• Car type: Sports cars and high-performance vehicles are more expensive to insure.
• Graduated licensing stage: Teens with learner's permits (G1) are usually covered by a parent's policy, while those with full licenses (G2 or higher) see a bigger premium increase. If you're a G2 driver, read our full guide on car insurance for g2 drivers.

That said, the average cost of car insurance in Canada is between $1,300 and $1,800 per year, but for teens, it can be much higher. You can expect to pay two to three times more than the average for a teen driver on your policy.

To get a better idea, you can use a comparator to get live car insurance quotes from leading insurance providers in Canada.

Why does car insurance for teens cost more?

Car insurance for teens in Canada costs more than experienced drivers because statistically, teens are at a higher risk for insurance companies.

Here are the reasons:

• Less experience: Teen drivers are new to the road and haven't developed the skills and awareness of seasoned drivers. This can lead to more accidents and higher costs for insurers.
• Higher accident rates: Studies show that drivers between 16 and 19 have the highest accident rates in Canada. This translates to a greater chance of insurance companies having to pay out claims for young drivers.
• Risky behaviour: Teen drivers are more prone to behaviours that increase accident risk, such as distracted driving (using phones), speeding or driving with passengers.

Insurance companies base their rates on risk assessment, and since teens are statistically riskier to insure, the premiums reflect that.

How to save on car insurance for teens?

Here are some ways to save on car insurance for your teen driver in Canada:

Before they get their license

• Good grades discounts: Many insurance companies offer discounts for teens with good academic records. Encourage your teen to keep their grades up, as it can make a significant difference in the premium.
• Driver's education courses: Completing a government-approved driver's education course can equip your teen with valuable skills and qualify them for a discount on their insurance.

Once they have a learner's permit (G1)

• Add Them as Occasional Drivers (if possible): In some cases, you might be able to add your teen with a learner's permit to your existing policy as an occasional driver, depending on the insurance company. This can be a cost-effective option as long as they aren't the primary driver.

Once they have a probationary license (G2) or full license

• Choose a safe and reliable car: Opt for a car with a good safety rating and a lower risk profile. Sports cars and high-performance vehicles typically come with higher insurance premiums.
• Consider usage-based insurance (UBI): UBI policies track driving habits and offer discounts for safe driving behaviour. If your teen is a responsible driver, this could be a good option to explore.
• Increase your deductible: This is the amount you have to pay out of pocket before your insurance kicks in. By increasing your deductible, you can lower your monthly premium. However, choose an amount you can comfortably afford in case of an accident.

Which is the best car insurance for teens?

It's difficult to pinpoint a single "best" car insurance company for teens. It’s because the premiums can vary depending on your location, the specific details of your teen's driving experience and the car they'll be driving.

Usually, the companies that UBI policies are the best option for teens. They can be a great option for saving money on teen driver insurance.

Here are some options for the cheapest car insurance for teens:

1. Allstate Insurance: Allstate offers UBI programs called Drivewise and Deductible Rewards programs that track good driving habits and reward policyholders with lower premiums.
2. Belair Direct: Belair Direct's Automerit program is a UBI option that monitors kilometres driven, time of day driven and braking habits to offer personalized rates.
3. CAA Insurance: CAA offers a telematics program called CAA Drive that tracks driving behaviour and offers discounts for safe driving.
4. Desjardins Insurance: Desjardins offers a UBI program called Intact Ajusto that tracks driving habits and offers personalized rates based on those habits.
5. TD Insurance: TD Insurance offers MyAdvantage UBI program that tracks kilometres driven, time of day driven and braking habits for potential discounts.

At the end of the day, choose a plan that best meets your needs and expectations, even if it costs a bit more than other plans. It will be a good choice in the long run. You can use our comparator and start exploring your options.

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Sunny Yadav Copywriter

Sunny has over six years of experience curating engaging content spanning across industries. Specifically in finance, his expertise is insurance reviews and lending and investment topics.