First time car insurance

12 minute read Published on Dec 21, 2023 by BrokerLink Communications

Teenagers jumping next to a campervan against green nature and blue sky

If you’re buying car insurance for the first time, then you probably have a lot of questions, like What documents do I need for car insurance? or How much is car insurance per month in Ontario? Thankfully, BrokerLink knows the answers to these questions and much more. Continue reading to learn all there is to know about buying auto insurance coverage for the first time in Canada.

What is first time car insurance?

Are you interested in getting your first car insurance policy in Canada? Then chances are, you are a first time driver in need of first time car insurance. Generally speaking, most first time drivers are young drivers or those under the age of 25. Thus, whether you are new to driving or new to the province or country, first time car insurance may apply to you.

When an insurance company sets your premium, they will do it based on many factors, and one of those factors is your driving experience. This is due to the fact that the less driving experience you have under your belt, the more likely you are to get into a car accident. As such, your car insurance rates are likely to be higher when buying first time car insurance than they will be down the road, assuming you maintain a clean driving record.

Who is first time car insurance for?

First time car insurance is typically designed for young, inexperienced drivers in Canada who only recently learned to drive and obtained a driver’s licence. However, it may also be applicable to newcomers, whether the person is new to the province or the entire country of Canada. A list of people who may benefit from first time car insurance includes:

  • New drivers
  • New Canadians with previous driving experience
  • A person who recently moved from another country to Canada
  • A person who recently moved to a new province
  • Newly licensed drivers
  • Mature drivers getting insured for the first time

As you can see, young drivers, inexperienced drivers, and recent newcomers to Canada may all be considered first time drivers. The type of insurance they require is the same, and their insurance rates are likely to be higher due to their lack of experience driving in Canada. Whatever your circumstances, remember that BrokerLink can help you find a quality first time car insurance policy.

How to get a driver’s licence as a first time driver in Canada

In order to purchase car insurance in Toronto or anywhere else in Canada, you must first obtain a valid driver’s licence in the province you live in. 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 licenceing system. For example, 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.

On the other hand, if you are a newcomer to Canada who already has a driver’s licence from another country, or you have lived in Canada for some time but are moving provinces, the process of obtaining a licence may look a little bit different. 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:

First, you must apply for a licence within 60 days of arriving in Ontario. The law gives newcomers 60 days to switch their licences. Please note that to switch your licence, you must apply in person at a Service Ontario location or a drive test centre location.

This process can’t be completed online. When you apply, you will likely need to take an eye exam, show photo identification that states your legal name, date of birth, and signature, provide a copy of your valid driver’s licence, whether it’s an out-of-province licence or a foreign licence, and finally, show documents that prove your driving experience, such as a claims experience letter.

Once all this documentation has been provided, you will pay the application fee and formally submit your application. Depending on your driving experience and the country or province that you arrived from, you may be required to take a written test and/or a road test in order to receive your Ontario driver’s licence.

How much does car insurance cost for first time drivers?

The cost of car insurance for first time drivers ranges considerably. Although all first time drivers likely want to keep their rates as low as possible, the reality is that most first time drivers pay more for car insurance than other drivers. This is due to your inexperience with driving. That said, not all first time drivers in Canada will face higher premiums. For example, if you are a newcomer to Canada with a proven track record of driving experience in another country, your rates will likely be lower than someone who only recently started driving.

That said, driving experience is only one factor of many that insurance companies consider when setting premiums. The type of car you drive, your gender, age, and more can all impact how much you pay for car insurance in Canada. You can learn more about how to shop around for car insurance to find the best possible rates by contacting BrokerLink. In the meantime, we’ve put together a list of the most common factors influencing auto insurance rates for all drivers, including first time drivers:

  • Where you live
  • Age
  • Gender
  • Vehicle type
  • How you use your vehicle
  • Driving record
  • Driving experience
  • Past claims
  • Prior insurance coverage
  • Number of kilometres you drive
  • Type of coverage on your policy
  • Your deductible

How driving experience impacts car insurance

As mentioned above, driving experience has a significant impact on how much you will pay for auto insurance in Canada. Thus, if you are a first time driver, meaning you have never driven before and have very minimal experience behind the wheel, your rates are likely to be higher. This is due to the fact that statistically, first time drivers are more likely to get into car accidents than mature, experienced drivers.

In other words, experience is a positive attribute that can contribute to cheaper rates. The good news is that even if your rates as a first time driver are higher initially, so long as you maintain a clean driving record, they are likely to drop the longer you drive.

To maintain a clean driving record, obey the rules of the road and drive responsibly at all times. Driving carelessly or recklessly, driving while distracted, or engaging in impaired driving can all have serious consequences, including a hike in your insurance premium.

Although, if your record is bad enough, your insurance policy could even be cancelled. Thus, if you want to keep your rates low as a first-time driver, drive with caution and avoid driving infractions.

Auto insurance requirements for first time drivers in Ontario

No matter your age and experience level, if you are a driver in Ontario, you will need to purchase auto insurance that meets the minimum coverage requirements in the province. In Ontario, that means a policy that contains the following four coverages:

Driving without car insurance in Canada is illegal

Please note that driving without auto insurance anywhere in Canada, including in Ontario, is illegal. Car insurance is mandatory. Thus, if you are caught driving without insurance, you could face serious penalties. Although driving uninsured does not result in demerit points, you could still incur major fines. In fact, Ontario has some of the heftiest fines for those who are caught driving without insurance. For example, for a first offence, you could be fined up to $25,000, and for a second offence, the maximum fine goes up to $50,000. In addition to the fine incurred, you are required to pay a 25% surcharge. Your driver’s licence could also be suspended for up to a year and your vehicle may be impounded at your own cost.

First time car insurance coverage: mandatory

There are many types of auto insurance out there. Knowing which makes sense for you as a first time driver can be tricky. Let’s begin with mandatory coverage. As mentioned above, you are legally required to purchase a policy that features the following four types of coverage in Ontario. We explain how each type of coverage can protect you below:

Third party liability coverage

Third party liability car insurance is a type of car insurance designed to protect drivers who cause car accidents. In other words, if you are responsible for a car 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.

Accident benefits coverage

Accident benefits coverage comes into play if you get into a car accident that results in bodily injury. With this coverage, your insurance company will pay for medical fees not covered by provincial healthcare, like prescription medications or physical therapy. Your insurer may also pay for costs associated with the injury, like lost income. If someone dies as a result of the accident, it may also issue a payout to cover funeral fees.

Direct compensation

Direct compensation property damage coverage 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 to repair your car.

Uninsured automobile coverage

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 anonymous. Thus, this type of insurance covers you in the event that you get into a hit and run.

First time car insurance coverage: optional

Now that you know about the types of auto insurance coverage that all first time drivers must purchase, let’s dive into the types of auto insurance that are optional. Keep in mind that just because the following coverages are optional doesn’t mean they aren’t incredibly important. Depending on your circumstances, it might be worthwhile to add all or some of these coverage types to your first time car insurance plan:

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.

The limit you choose for your collision coverage should always reflect the value of your vehicle. Otherwise, you may be on the hook for paying a large chunk of the cost to repair or replace your vehicle.

Comprehensive coverage

Comprehensive car coverage is another type of optional coverage that is often worthwhile for first time drivers, especially for those with valuable cars. This type of coverage protects your car from non-collision-related incidents, namely damage or theft while parked.

Comprehensive coverage 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.

If your car is damaged due to a fire or hailstorm, you can receive a payout from your insurance company under the comprehensive coverage portion of your policy to cover the cost of repairing it.

Accident forgiveness coverage

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.

Note: coverage and eligibility varies by province.

Waiver of depreciation

Adding a waiver of depreciation to your first time car insurance policy is a wise choice if the car you are driving is new. With a waiver of depreciation, if you get into an accident and your car is deemed a write-off, your insurer will reimburse you for the cost of buying a brand-new vehicle.

Without this type of coverage, you will likely only be covered for the value of your car, less depreciation, also known as actual cash value coverage. Actual cash value coverage results in a much smaller insurance payout.

Loss of use coverage

Loss of use coverage is one last option for first time drivers. This type of coverage will pay for you to take alternate modes of transportation if your car is damaged in a collision and needs to be repaired. While your car is in the shop, you will be without a vehicle, which can be extremely inconvenient, not to mention costly.

Loss of use coverage alleviates the financial burden of being without a car by reimbursing you for transportation costs incurred, whether you choose to rent a car, hire ride shares, or take public transportation.

Contact BrokerLink for more information on first time car insurance

If you want to learn more about how first time car insurance works or how you can save money on your first-ever car insurance plan in Canada, get in touch with BrokerLink today. We are expert insurance brokers who will ensure you find the best possible policy for your needs. We can also give you all kinds of advice on ways to make the most of your first time policy, as well as provide tips on how to report a car accident, what to do if someone else has an accident in your car, and more.

Get started today by requesting a free quote from one of our licensed insurance advisors. You can do so by contacting BrokerLink over the phone, visiting any one of our 200+ locations in person, or using the online quote tool on our website.

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FAQs about first time car insurance

How long does it take to buy first time car insurance?

The reality is that purchasing car insurance can be a relatively quick process, especially if you have all of your documents in order. To purchase auto insurance in Canada, you should come prepared with a copy of your driver’s licence, your driver’s abstract or claims experience letter, if applicable, and the details of your vehicle, e.g. vehicle identification number, vehicle make and model, etc. Once you have everything in order, which should only take you 10 or 15 minutes, you can start shopping around for coverage. Nowadays, you can buy car insurance coverage online, which has streamlined the entire process and made it even quicker. Depending on how long you spend comparing policies and weighing your options, you could purchase an insurance policy in as little as half an hour.

How do I renew my first car insurance policy?

Renewing car insurance is actually relatively simple. If you have a first time car insurance policy, it may automatically renew on the last date of the term. However, if this isn’t the case, all you have to do is contact your provider and let them know that you wish to renew your policy. You might be able to do this over the phone, online, or in person. Just be careful to notify them before your policy expires, as renewing expired car insurance renewal can be trickier and more expensive.

Will my first time car insurance rates go up if I get into an accident?

If you caused the accident, then your rates are likely to go up - unless your policy includes accident forgiveness coverage. With accident forgiveness coverage, your insurer may not be able to raise your rates after your first at-fault accident, though it depends on the specific circumstances of the accident. Further, if you were not liable for the accident, then the accident is unlikely to raise your rates.

Does first time car insurance cover personal belongings stolen from a car?

No. First time car insurance, even those policies that feature comprehensive coverage, do not generally cover the cost of stolen personal belongings. While comprehensive insurance will cover the cost of replacing a stolen vehicle or replacing permanent fixtures in a vehicle, like a steering wheel or catalytic converter, it will not cover you for belongings like a wallet or laptop being stolen from your car. There is a chance your home insurance policy would cover these belongings under contents coverage, but you will need to review the terms and conditions of your property insurance plan to find out.

Do I need to have a driver’s licence before I can buy first time car insurance?

Yes. You will not be able to purchase a car insurance policy anywhere in Canada until you obtain a valid driver’s licence in the province where you live.

How can I make first time car insurance more affordable?

You can make first time car insurance more affordable by enrolling in a driver’s education program, purchasing multiple auto insurance policies at once, bundling different insurance policies together, driving safely, minimizing how much you drive, or by qualifying for a winter tire discount, a group insurance discount, a telematics discounts, or another type of auto insurance discount.

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