How to get car insurance for the first time

According to Auto Trader, approximately 25% of Canadians plan on purchasing a vehicle in the next 6 months. If you're part of this statistic and are buying a new car for yourself, you'll also need to add auto insurance to your list of costs.

First-time car and insurance buying can be overwhelming. With questions like, "Do you get insurance before or after buying a car?" along with provincial car insurance regulations, you might not know where to start. If anything, purchasing a car insurance policy for your vehicle is just as imperative as choosing a vehicle model itself.

Luckily, if you're in the market to buy auto insurance, we've put together a complete and easy-to-follow guide you can use to make an informed decision when it comes to your car insurance coverage. For more information about getting your first car insurance plan, stick around.

Understanding the basics of first-time car insurance

Insurance for first-time car buyers can be divided into two categories: mandatory and optional. Because buying car insurance is a legal requirement for all Canadian motorists who intend to operate a motor vehicle on public roads, there are certain types of auto insurance policies and coverage options you'll need to carry to comply with the law:

Mandatory auto insurance

Common mandatory first-time car insurance policies include:

Third-party liability insurance

Third-party liability car insurance is a type of car insurance designed to protect drivers who cause car accidents. If you are responsible for an accident that results in bodily injury or property damage, the liability coverage portion of your policy would pay for any applicable medical fees, repair bills, legal fees, and more. Without this auto insurance, imagine how much money an at-fault accident could cost out of pocket!

Accident benefits

Accident benefits coverage comes into play if you get into an accident that results in bodily injury. With this coverage, your insurance company will pay for medical bills not covered by provincial healthcare, like prescription medications or physical therapy.

Uninsured motorist insurance

Uninsured automobile coverage, also known as uninsured motorist coverage, will pay for the cost of a collision if you get into an accident with someone who is underinsured, uninsured, or unknown (hit-and-run).

Direct compensation-property damage (DCPD)

DCPD car insurance reimburses policyholders if they get into a car accident and their vehicle is damaged. As long as you are not liable for the accident, you can receive a payout directly from your insurer to help you pay for the repairs to your car.

Optional first car insurance policies

Beyond these mandatory insurance policies, drivers also have the option of purchasing additional car insurance coverage to their portfolio for additional protection while behind the wheel. Common optional insurance coverage includes:

Comprehensive coverage

Comprehensive insurance offers financial protection against certain risks, known as insured perils. These insured perils may include vandalism, theft, fire, wind, hail, water damage, falling or flying objects, and more. Canada experienced a record-breaking $1.5 billion in vehicle theft replacement costs in 2023. So, you may want to consider this insurance for your own car.

Collision coverage

Collision car coverage will reimburse policyholders for the cost of repairing or replacing their vehicle if it is severely damaged in an accident. For example, if your car is totalled after colliding with another vehicle, an animal, or a grounded object on the road, your insurance company might issue a payout to help you replace it.

Accident forgiveness

One more type of optional car insurance coverage popular among first-time drivers is accident forgiveness. Accident forgiveness is additional coverage that can be added to your car insurance policy as an endorsement, to protect your driving record and to help prevent your insurance premium from increasing if you have an at-fault accident claim.

It's important to note that while all Canadian drivers require minimum coverage, insurance laws are provincially regulated. Therefore, the types of first-time car insurance policies you require, as well as the coverage limits needed, will vary. For example, in British Columbia, Ontario, and Alberta, $200,000 of liability insurance is required for all drivers, whereas only $50,000 is required for drivers in Quebec.

How to get a driver's licence in Canada

To purchase car insurance in Toronto or anywhere else in Canada, you must first obtain a valid driver’s licence in the province where you live. If you are a young adult who’s been living in Canada for some time, you will need to move through your province’s graduated licensing system.

In Ontario, you must pass three tests to get your full licence, one written test and two road tests. These are known as the G1, G2, and G levels of licensing. You should get insured as soon as you start driving regularly on your own, which usually occurs during the G2 phase of licensing.

As an example, here is what you can expect if you are moving to Ontario and need to switch your driver’s licence to an Ontario driver’s licence:

1. Determine your eligibility: In Ontario, the minimum age to begin the graduated licensing process is 16 years old. However, this minimum age will vary between provinces. If you are a newcomer, you may be required to present documents proving your residency and legal status in Canada.
2. Pass a written knowledge test: To get your G1 license in Ontario, you'll need to pass a written knowledge test on the rules of the road, traffic signs, and other information. To prepare for this test, ensure you study the Ontario Driver's Handbook, or the one that's related to your province's test program, to prepare for your exam.
3. Get a vision test: Ontario requires all drivers to take a vision test at the Service Ontario location to ensure they meet minimum vision requirements. This may vary between provinces.
4. Get your G1 licence: Now that you've passed your G1 license, you'll be able to drive with a fully licenced driver in the car. Note that there are some restrictions on where you can drive (driving on the highway is prohibited), and the time of day you can drive. You'll need to wait at least 8 to 12 months before moving onto your G2 licence.
5. Consider a driver's training course: To experience discounts on your insurance premiums, consider taking a driver's education course.
6. Pass your road test: Next, you'll need to take a road test, which will evaluate your ability to operate a vehicle safely, follow traffic laws, and respond to road conditions. This test also looks at your skills like lane changes, parking, and more.
7. Get your G2 license: If you pass your road test, you'll get your G2 license. With this driver's licence, you'll be able to drive alone and with a certain number of passengers.
8. Get your G license: After holding your G2 licence for 12 to 24 months (depending on your province), you can schedule a final road test to obtain your full G licence.

Factors that affect your car insurance rates as a new driver

Car insurance rates for first-time drivers can vary significantly. Although all first-time drivers likely want to keep their insurance rates as low as possible, the reality is that young driver's insurance plans are more expensive than those for experienced motorists.

This is due to your inexperience with driving. That said, not all first-time drivers in Canada will face higher car insurance premiums. For example, if you are a newcomer to Canada with a proven track record of driving experience in another country, your auto insurance rates will likely be lower than those of someone who is purchasing first-time car insurance and is under the age of 25. However, insurance companies base auto insurance rates on several other factors beyond how old you are, including:

Where you live

Where you live plays a big factor in how auto insurance companies price your insurance rates. For example, if you live in an urban area like downtown Toronto, Edmonton, or Vancouver where there's high traffic congestion and crime rates, your insurance provider will price your car insurance rates higher than someone living in a rural area, given their chances of getting into a collision or filing a claim for a stolen vehicle is much lower.

Gender

Gender is also significant if you're buying insurance for the first time. Statistics show that male young drivers pose more of a risk on the road and are more likely to engage in risky driving behaviour than young female drivers. Because of this, first-time male drivers can anticipate higher car insurance premiums than their female counterparts.

Being a responsible driver and maintaining a clean driving record will help you prove to car insurance companies that you do not pose a threat on the road. So, consider taking a defensive driving course and avoid traffic violations that could put you and others at risk.

Type of first-time car insurance policies you choose

Remember, while each province has mandatory insurance coverage and coverage limits, all drivers must have. If you choose to purchase optional first-time car insurance policies like collision or comprehensive, along with higher coverage limits, you will need to pay an additional fee.

The make and model of vehicle

Saving money for a car is exciting, especially when you get to begin shopping around for different models. When buying car insurance, insurance companies also look at the make and model of the vehicle you drive. Driving a luxury vehicle, sports car, or other type of model that has high repair and replacement costs can increase your costs when purchasing car insurance.

Typically, cars and SUVs are less expensive to insure than luxury vehicles. However, because of lower income levels, Auto Trader reports that younger drivers are 7% more likely to purchase sedans than SUVs compared to more experienced drivers.

Regardless, as a young driver trying to save money on first-time car insurance, consider driving a standard or used model with modern safety features.

How often you drive

Drivers who spend more time on the road are at a greater risk of being in a collision than those who are occasional drivers. If you only plan on driving some of the time and don't need the car every day, consider purchasing occasional or secondary driver car insurance instead of your own insurance to secure cheaper car insurance.

Alternatively, you can purchase usage-based insurance. This coverage allows insurance companies to track your driving habits using a device that's installed in your vehicle or an app. If you demonstrate safe driving behaviour, such as not speeding or hard braking, you could qualify for savings on your premiums.

Past insurance history

While your insurance history won't matter as much to inexperienced drivers who are purchasing first-time car insurance, as you gain experience, it will. Your ability to pay your own policy on time each month and refrain from filing numerous car insurance claims can appear as a red flag to insurance companies. Again, being a responsible motorist and paying your insurance on time can help you maintain a good insurance record.

Driving record

Finally, maintaining a good driving record is also key to saving money with car insurance companies. Avoid traffic violations and accidents to show your insurance provider you are a safe and responsible young driver, and maintain a responsible driving history.

Ways to lower your auto insurance costs when buying car insurance for the first time

According to Canadian Underwriter, rates for auto insurance rose 13.3% in the first quarter of 2024, with increases occurring in every province. But that doesn't mean you can't save on your coverage. Here's what you should do:

Compare car insurance quotes

Before purchasing car insurance, compare quotes from different insurance companies. All companies have their own underwriting policies, which could lead to different rates. By comparing costs and coverage options, you can find the right coverage for your budget.

Work with an insurance broker

Rather than an insurance agent, consider working with an insurance broker. Brokers work independently from insurance companies, allowing them to shop around on your behalf, look at different car insurance quotes, and help you save on your coverage.

Consider how much coverage you need

To find the right coverage for your own vehicle, the first thing you need to do is consider what your driving needs and habits are. There's no need to pay for car insurance coverage you don't need.

Ask about insurance discounts

Insurance companies offer numerous discounts to Canadian motorists, even new drivers. Common discounts include:

Common insurance mistakes new drivers make

When purchasing car insurance for the first time, it's easy to make mistakes. Common errors include:

• Not comparing quotes
• Choose too little or too much coverage.
• Ignoring policy exclusions and the fine print in policy documents.
• Believing that the cheapest coverage available is the best option (balance protection levels and affordability).

Get affordable auto insurance with BrokerLink

At BrokerLink, we help new drivers find affordable coverage. With access to numerous policies from some of Canada's top insurance companies, our insurance brokers can help you shop around, unlock new driver discounts, and answer any questions you may like such as, whether insurance carries over to a new car, when the best time to buy a car is, and how much cars depreciate per year.

To work with us, contact BrokerLink over the phone or by email to speak with a broker directly. You can also get a new driver's insurance quote using our online quote tool at any time!

Get an auto insurance quote [phone]