Car Insurance Rates for Under 25

12 minute read Published on Jul 17, 2022 by BrokerLink Communications

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Young drivers, especially those below the age of 25, often struggle to find affordable car insurance coverage. Premiums tend to be highest for this age group owing to a lack of driving experience. This leads many young drivers to wonder, “is it possible to find good auto insurance if I’m under 25?”

The answer is yes, though it can be more difficult given your age. Thankfully, age doesn’t impact the types of coverage available to you, only the price you will pay for such coverage.

To learn more about car insurance rates for drivers under 25 and how to find the right auto insurance policy for you, keep reading.

How does age impact car insurance premiums in Canada?

The reality is that age is one of the most prominent factors used to calculate insurance rates in Canada. Insurance providers consider a number of factors, which we will discuss below. However, age is certainly one of the most heavily weighted factors.

Insurance companies see a direct correlation between age and risk level. As a new driver, you have little to no driving experience, which means your odds of getting into an accident might be greater. As such, you are a bigger liability, which is why insurance companies raise your rates.

Though it might not seem fair, the Canadian Humans Rights Commission permits insurance companies to use the variables of age, sex, and marital status to calculate insurance premiums.

Do car insurance rates drop after age 25?

The good news is that car insurance rates tend to drop after age 25. Drivers under the age of 25 are considered young drivers and face higher premiums accordingly. But as soon as you turn 25, the average price of car insurance drops.

That said, your specific premium will depend on a variety of factors beyond age, including claims history, driving record, location, and more.

What auto insurance coverage do I need as a driver under 25 in Canada?

There is a wide range of car insurance coverage options available to drivers under 25 in Canada. These coverage options are the same for all drivers regardless of age.

Some are mandatory and some are optional.

Mandatory auto insurance coverage for under 25

Car insurance is compulsory in every province and territory in Canada. Whether you’re 20 or 65, you will need to purchase car insurance in order to get behind the wheel. That said, the rules and regulations surrounding car insurance vary by province.

Each province has its own minimum coverage requirements for auto insurance. We are going to use the mandatory coverage types in Ontario as an example. (Keep in mind that minimum coverage between provinces is relatively similar, though the coverage amounts may vary.

For example, Ontario and Alberta drivers are required to carry at least $200,000 in third party liability coverage, while Nova Scotia drivers must hold a minimum of $500,000 in liability coverage at all times.

Research the requirements in your province or speak with a BrokerLink broker to learn more.)

  • Third-party liability coverage: Third-party liability coverage provides legal protection if you injure someone else or cause property damage to another person’s property on the road. This type of coverage can help pay for medical expenses associated with bodily injuries or repairs of damaged cars, as well as any applicable legal fees and settlements up to the coverage limit. In Ontario, drivers are required to hold a minimum of $200,000 in third-party liability coverage at all times.
  • Direct compensation - property damage coverage: Direct compensation - property damage coverage protects an insured vehicle and its contents against property damage, as long as the policyholder is not liable for the collision that caused said damage. Under this type of coverage, the insurance company often pays for the repair or replacement of your car directly. Note that to be eligible for direct compensation coverage, the collision must meet the following criteria: it occurred in Ontario, it involved more than one car, and it involved at least one car that participates in the province’s car insurance program.
  • Uninsured automobile coverage: Uninsured automobile protects you and any passengers in your vehicle if you get into an accident with an at-fault driver who is either uninsured or underinsured. This type of coverage can also protect the policyholder in the event of a hit-and-run.
  • Accident benefits coverage: If you, a passenger, or a pedestrian requires medical attention following a collision, accident benefits coverage can help. You can claim this coverage no matter who was at fault for the accident. It can help pay for a wide range of medical expenses that may not be not covered by health insurance, like prescription medications, physical therapy, or rehabilitation, as well as loss of income.

Optional auto insurance coverage for under 25

Beyond the mandatory coverage types listed above, there are several optional coverages drivers under 25 may benefit from adding to their policies.

From collision coverage to accident forgiveness coverage, keep reading to discover three of the most popular types of optional car insurance coverage in Canada.

  • Collision coverage: If you get into an accident with another car or object on the road, no matter who is at fault for the accident, collision coverage can help cover the costs. Under the collision coverage section of your policy, you can receive compensation to help pay for any property damage that resulted from the accident, such as a damaged vehicle.
  • Comprehensive coverage: Comprehensive coverage, also known as parked car insurance, may be worthwhile for young drivers in Canada. This optional type of coverage provides peace of mind since it protects against a wide range of unforeseen incidents beyond collisions. Comprehensive coverage will compensate you in the event of damage caused by an insured peril. Examples of insured perils are theft, vandalism, water damage, fire, riots, falling objects, and more.
  • Accident forgiveness coverage: The last optional type of coverage that may appeal to drivers under 25 is accident forgiveness. This type of coverage is often recommended for new drivers as it prevents the insurance provider from raising your rate after your first at-fault accident.

What variables determine car insurance premiums for drivers under 25?

As mentioned, age is just one variable that determines car insurance premiums for drivers under 25. Insurance companies take many other factors into account when calculating risk. Young drivers might find it helpful to understand exactly which factors - some of which are within your control and some of which aren’t - matter to insurance companies.

Below is a list of some of the most important factors affecting the cost of premiums in Canada.

Driving history

One of the most important factors used to calculate insurance premiums, aside from age, is one’s driving history. This is a combination of a driver’s experience and record.

Having ample driving experience is usually a positive attribute. Rather, it is a lack of driving experience that raises the insurance premiums for young drivers. However, years of driving experience will only work to your advantage if it is coupled with a clean driving record.

If you drive the speed limit and obey the rules of the road, you are likely to have a clean driving record, and the insurance company may reward you accordingly. But if you frequently speed, drive recklessly, or drive under the influence of drugs or alcohol, your driving record may be poor, and your insurance premium will likely be higher.

Therefore, the best thing you can do to reduce how much you pay for car insurance at any age is to drive safely and responsibly.


Like age, sex is another variable out of one’s control that insurance companies use to determine car insurance rates. If you’re wondering why insurers base their rates, in part, on sex, it’s because research indicates that drivers of one sex are more likely to be involved in collisions.

In particular, deaths due to transport-related incidents are disproportionately male. Further, Statistics Canada reveals that male drivers are more likely to drive under the influence of drugs or alcohol than females and more likely to commit traffic infractions, such as reckless driving and driving while prohibited.


Location is another factor that can impact your young driver’s car insurance rate. Where you drive your car can affect how much you pay for insurance. Young drivers who live in populous metropolitan areas such as Toronto, Vancouver, or Calgary, are more likely to get into accidents due to the increase in traffic, and as such, tend to pay more for car insurance.

In contrast, drivers who live in rural parts of the country where there are fewer cars on the road are considered less likely to get into an accident and may benefit from a reduced premium.

Finally, if you live or work in a part of Canada prone to climate-related incidents, such as floods or wildfires, your insurance premium may be affected.

Vehicle make, model, and year

The make, model, and year of the car you drive may also impact your premium. Typically, newer, more expensive cars cost more to insure since they would cost more to replace or repair in the event of an accident or theft.

The exception to this rule is if your car is equipped with anti-theft devices or other safety features, such as security systems. In contrast, older, used, or budget-friendly cars usually cost less to insure.

How frequently you drive your vehicle

How much time you spend on the road is another factor that can influence your car insurance rate as a young driver in Canada. If you drive an above-average amount of time (perhaps you drive for your job or have a long commute to work), or you frequently drive at night or on major highways, the insurance provider may raise your premium.

On the other hand, if you are an occasional driver who only drives on weekends or to university a couple of teams each week, your chances of getting into an accident go down and so might your insurance rates.

Marital status

Finally, a driver’s marital status can impact their car insurance rate. Data suggests that married people are more responsible and financially stable, which insurance companies may take into consideration when calculating insurance costs.

If you are under 25 and married, be sure to mention this to your insurance company.

Save money on car insurance for under 25 with BrokerLink’s top tips and tricks

There’s no denying that car insurance can be expensive for young drivers. In fact, car insurance rates for drivers under 25 are typically the highest in Canada. Thankfully, there are a few things you can do to minimize how much you spend on car insurance.

Beyond partnering with a trusted brokerage like BrokerLink who can help you find the best coverage at the best rate, there are several other ways to save money on your auto insurance policy. BrokerLink’s expert insurance advisors have compiled a list of their top tips for saving money on car insurance for drivers under 25.

Maintain good grades

If you are currently enrolled at an education institution, whether a high school, college, or university, maintaining good grades may reduce your premium. Some insurance companies in Canada offer discounts to full-time students with high grades.

Research alumni discounts

Did you recently graduate from a post-secondary institution in Canada? Then you may be eligible for a preferred auto insurance rate thanks to your alma mater.

Some insurance companies offer discounts to alumni of certain institutions, so do some research or ask a BrokerLink insurance advisor to research this for you.

Maintain a high credit score

Building and maintaining a high credit score is one way to save money on car insurance for young drivers. Specifically, young drivers in Quebec and Alberta may benefit from an insurance discount if they have good credit scores.

Choose the right coverage

Choosing the right coverage - and coverage limits - is crucial to minimizing how much you spend on car insurance. Auto insurance for drivers under 25 is already expensive, don’t make it more expensive by purchasing unnecessary coverage.

While purchasing additional coverage or higher coverage limits can protect you from financial losses in the event of accidents or theft, some auto insurance coverages may not be relevant to young drivers. For example, liability coverage is incredibly important (there’s a reason why it’s mandatory in Canada).

Young drivers should ideally make sure they have liability limits that cover their total net worth. But there’s no need to purchase a coverage limit above your worth, especially if you can’t afford it. Further, comprehensive and collision coverage (both optional types of coverage) may not be worthwhile depending on the vehicle you drive.

If you drive a high-value car, it can be hugely beneficial. But if your car is old, used, and worth only a few thousand dollars, purchasing comprehensive and collision coverage might mean paying more money to protect an asset than the asset’s actually worth.

For unbiased, objective advice on the right coverage for you, contact BrokerLink. We work independently of insurance companies which means we put your needs first and can offer our expert advice on the coverages you can benefit from.

Increase your deductible

Reduce your insurance premium by increasing your deductible. Doing so will reduce how much you pay for almost any type of insurance. The average car insurance deductible in Canada is $500. By raising your deductible to $1,000 or more, you could save money on your auto insurance policy.

That said, increasing your deductible has both pros and cons. If you are considering raising your policy deductible, speak with a BrokerLink insurance advisor who can inform you of the possible consequences of doing so.

Choose annual over monthly payments

If you can afford to pay for your car insurance policy annually, doing so can save you money. Monthly or quarterly installment payments usually come with administrative fees that ultimately make it cheaper to pay on time upfront.

Install winter tires on your car

Alberta winters are world-renowned. Known for freezing temperatures, snow, and ice, driving in the winter is infinitely more dangerous than driving in the summer in Alberta. For this reason, insurance companies offer discounts to drivers who install winter tires on their cars.

Snow tires are known for having superior capabilities like traction in winter weather. Therefore, when you equip your vehicle with them, you significantly reduce the odds of getting into an accident.

Alberta insurance companies recognize this and may reward you with savings of up to 5% on your auto insurance policy.

Drive a hybrid or electric vehicle

Driving an eco-friendly vehicle, such as a hybrid or electric vehicle, can reduce how much you pay for auto insurance. If you’re looking to buy your first car, we recommend choosing a hybrid or electric model.

Doing so will not only reduce your impact on the environment and save you money at the gas pump but may also make you eligible for a car insurance discount.

Enrol in driving school

Enrolling in an approved driving school in Canada is another money-saving tip for young drivers. Insurance companies know that formal driving schools produce skilled, safe drivers who are more likely to follow the rules of the road.

For these reasons, they offer discounts to new drivers who can prove they completed a recognized driving program.

Outfit your car with safety devices

Equipping a vehicle with safety features is one final way to save money on car insurance. Outfitting your car with anti-theft devices or a security system decreases the odds it will be stolen.

Insurance companies acknowledge this and may reduce your premium accordingly. Therefore, adding safety devices to your vehicle, especially if it’s valuable, can be worthwhile for drivers under 25.

Contact BrokerLink to obtain a free car insurance quote for drivers under 25

Do you want to learn more about car insurance for young drivers in Canada? You’re in the right place!

With over 30 years in business, BrokerLink is a car insurance expert. Our insurance advisors have helped thousands of young drivers across Canada find the right coverage at the lowest possible price.

We never want auto insurance to break the bank, and we know how expensive it can be for drivers under 25. For this reason, we always make it our mission to find affordable auto insurance rates for young drivers.

When you partner with BrokerLink, we will unlock discounts on your behalf and let you in on the industry’s best-kept secrets for saving money on car insurance. Plus, we do all the work for you.

While you’re relaxing and spending time with friends, your dedicated broker will be working behind the scenes, obtaining quotes and comparing policy options.

If you’re a young driver in the market for car insurance, contact BrokerLink today. We can be reached by phone, email, or in person at any of our locations across Canada. You can also use our online quote tool to request a free car insurance quote right now.

All BrokerLink quotes are accurate, competitive, and 100% obligation-free. Begin your car insurance journey with BrokerLink today!

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