How to save on car insurance in 2025

Car insurance premiums are getting more expensive--and quickly. In 2024 alone, auto insurance costs increased by an average of 12%, with Alberta and Ontario experiencing the highest rate hikes of 13%. Meanwhile, in Atlantic Canada, drivers faced a staggering 14.5% year-over-year increase in the first quarter of 2024.

So, what's causing insurance costs to skyrocket across the country? A large contributor is inflation, with vehicle repair costs up 22.3% since 2019. Other factors include rising auto theft rates and record-breaking insured loss payouts.

For Canadians, saving money on car insurance is more important than ever. Whether you're looking to renew your car insurance or purchase coverage as a young driver for the first time, understanding how premiums are calculated and what you can do to save money is key.

In this guide, we’ll break down the top factors impacting your rates and share practical tips you can use to cut costs without sacrificing your coverage. Stick around for more information.

Factors that influence auto insurance costs

Before we dive into the different ways to save on car insurance, it's important to know how premiums are calculated by insurance companies in Canada. Common factors that create your risk profile include:

Age and driving experience

Young drivers tend to pay more for auto insurance because they statistically have a higher likelihood of being involved in a car accident compared to experienced drivers. The way insurance providers see things, the more years you have behind the wheel, the less of a risk you pose to other drivers.

Driving history

Drivers who have a clean driving record that's free of accidents, claims or traffic violations tend to pay less for car insurance because they are considered low-risk drivers.

Vehicle make and model

The make and model of your vehicle have a huge impact on insurance costs. High-end or luxury vehicles, such as sports cars, have higher premiums because they cost more to repair or replace. They're also at more of a risk of being stolen. With insurance claims for stolen vehicles in Canada reaching a record $1.5 billion in 2023, if you drive an at-risk vehicle, you're likely to pay more for it. Buying a new car? Research vehicles with the lowest insurance rates before making a decision.

Your postal code

Where you live in Canada matters, premiums not only vary between provinces, but also between neighbourhoods. For example, urban areas with higher traffic volumes, theft, or accident rates, like Vancouver, Toronto, or Edmonton, often have higher premiums than those living in more rural areas.

Credit score

In provinces like Alberta and Nova Scotia, insurance companies may use your credit score to assess your risk level. In this scenario, having a high credit score can work in your favour to secure lower rates.

How to lower your car insurance rates

For lower premiums, follow these practical tips to save below:

Tip 1: Shop around and compare quotes

No two insurance companies are the same. If you live in a province in Canada that operates under a private insurance system, like Alberta, Ontario, Nova Scotia, New Brunswick, or Newfoundland, shopping around and comparing quotes from several insurance companies is one of the easiest and most effective strategies to save.

Most insurance companies use different underwriting frameworks to calculate risk. This means that some factors may be weighed differently than others, which can lead to varying rates among insurers. So, getting quotes from at least three different providers is a smart move. There are several ways Canadians can conveniently shop around, including:

• Dedicated rate comparison websites like BrokerLink.

• Directly with insurance brokers who work independently from insurance companies.

Don't assume being loyal to one provider will pay off. Note that even if you've been a long-term customer with an insurance provider, it doesn't mean you're getting the best deal available.

Tip 2: Bundle your insurance policies with the same insurance company

Another effective way to save on your insurance is by bundling your insurance policies with the same company. This can include:

• Auto insurance and home insurance.

• Auto insurance and business insurance.

Insurers reward bundled policies with loyalty discounts, often saving customers between 5% and 20% on each insurance policy, which can keep a significant amount of money in your bank account at the end of the day.

Outside of the financial benefits this strategy provides, bundling offers convenience and allows you to have all your policies in one place, simplifying claims and policy management.

Tip 3: Opt for a higher deductible

A deductible is the amount you pay out of pocket during a claim before your insurance company will cover any remaining costs. Common insurance policies requiring a deductible amount include collision coverage and comprehensive coverage.

Generally speaking, a higher deductible means a lower premium. But keep in mind that it does put you at a higher risk of paying more if something goes wrong. For example, opting for a higher deductible of $1,000 instead of $500 can reduce your insurance costs by 10% to 15%, depending on your driving profile. However, you'll need to be prepared to pay more at the time of a claim in the future.

As a rule of thumb, if you're a relatively safe driver who rarely makes claims and can afford to pay a higher deductible in an emergency, this is a great way to lower your premiums long-term.

Tip 4: Opt for a telematics or usage-based insurance

Usage-based insurance (UBI) is a modern approach to car insurance that rewards safe driving behaviour. This involves installing a device in your vehicle or using a mobile app to track your driving habits, such as:

• Speed and braking habits

• The time of day you drive

• Your daily driving distances and annual mileage

• Rapid acceleration

If you're a safe driver who spends little to no time behind the wheel, you could be eligible to save up to 25% on your insurance costs. For example, if you're a remote or hybrid worker, enrolling in a telematics program is a great option.

While some Canadians may be worried about privacy, most telematics programs only track your driving-related habits. If you're confident in your driving record, opting for this money-saving solution is worth considering.

Tip 5: Maintain a clean driving record

Having a good driving record plays a major role in your insurance savings. Even a traffic ticket can increase your insurance rates for up to six years. To maintain a good driving history and avoid at-fault accidents:

Take a Defensive driving course

Defensive driving courses teach drivers how to deal with road hazards and other challenges on the road. Not only will this type of course improve your driving skills, but it can also make you eligible for a discount with your insurance company.

Avoid distracted driving habits

Avoid text and driving, eating, drinking, or other habits like checking your GPS while you're on the road. This can lead to a distracted driving charge or accident, both of which have serious consequences for increased insurance rates.

Take a young driver training course

Although young drivers face higher costs than mature drivers, the best thing you can do is set yourself up for success by taking a driver training course while you're getting your driver's license. These courses teach you the rules of the road, highway safety tips, and other strategies to help you adopt good driving habits and lower your costs over time.

Ultimately, the cleaner your record, the more negotiating power you have with your insurance representative. Many insurers also offer accident forgiveness insurance, meaning your first at-fault accident won’t impact your premium. So, if you're a safe driver with no accidents, adding this policy to your plan can be highly beneficial and act as a safeguard.

Tip 6: Take advantage of insurance discounts

Beyond bundling your policies, opting for a telematics program, and maintaining a good record, most insurance companies offer discounts to customers for the following:

• Installing winter tires and other safety features like dash cameras and wheel locks on your vehicle can help you save up to 5%.

• Insuring multiple vehicles with the same insurer under a multi-car insurance policy can help you save up to 15%.

• Being a member of a professional association also offers a 5% discount with most insurers.

• Good student discounts for young drivers at university offer up to 10% off on your auto coverage.

Adjust your auto coverage based on your vehicle

Although you'll legally need to keep your vehicle insured to drive on public roads across Canada, as your vehicle ages and your driving needs change, so can your insurance needs. If you own a relatively old vehicle, dropping your collision and comprehensive coverage may be a good financial choice. A common rule of thumb is that if your vehicle's market value is less than 10x your annual premium, you should consider dropping your full coverage and stick to the basics.

For example, let's say your annual premium is $1,200 and your 12-year-old car is only worth $6,000. Because your car value is only 6x the cost of your premium, you may be overpaying. Opting to set aside some emergency savings to cover repair costs may be more cost-effective.

Do all provinces and insurers offer the same discounts?

No, discounts can vary between provinces and insurance companies, which is why shopping around within your home province is recommended.

Is it better to pay your insurance annually or monthly?

Paying for your coverage up front can help you save money. Insurers charge a fee to those who pay monthly, as it costs them money to process each of your payments.

Does being unemployed affect my insurance costs?

No, insurance companies will not consider your employment status in their cost analysis.

To save on coverage, contact BrokerLink today!

Saving on your insurance costs isn't as difficult and time-consuming as it may appear. All it takes is careful planning and the help of a broker.

At BrokerLink, we help Canadians keep more money in their pockets when purchasing auto insurance. Whether you're looking for cheap classic car coverage, liability car insurance, or other forms of coverage, our experienced brokers have got you covered.

To work with us, contact BrokerLink directly over the phone or use our online quote tool to compare rates from some of Canada's top insurance providers within minutes!

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How to save on car insurance FAQs

How much should I pay monthly for car insurance?

When it comes to car insurance rates, the answer you'll often hear is, "It depends!" Your monthly insurance premium is influenced by various factors, including your location, insurance history, driving record and age. These factors will greatly affect the amount you pay each month, which incentivizes you to become a better driver.

Does my driving experience affect my car insurance rates?

Yes, insurance companies set your rates based on your driving experience and driving history. If you have limited experience behind the wheel, your insurance premiums will be higher. In contrast, if you have a long history of accident-free driving, your rates will be lower. It’s always better to be safe rather than sorry.

Do newer cars have higher insurance premiums?

The answer to this question will vary. However, determining your insurance costs isn't straightforward because various factors come into play. Safety features in newer cars can help lower your insurance rates. However, your insurance history, age, location and other variables also play a pivotal role in determining the final amount you'll pay.

If you have any questions, contact one of our local branches.