When does car insurance go down?

7 minute read Published on Nov 17, 2023 by BrokerLink Communications

Car toy with coins on a table

If you’re a driver in Canada, then you must have car insurance. Auto insurance is mandatory in Canada, but the reality is that not all drivers pay the same amount for their insurance policies. Why? Due to the fact that many factors determine auto insurance rates. One of the most important factors that impacts how much a person pays for car coverage is age. Today, we explore the influence of age on car insurance premiums, as well as at what age car insurance rates start to go down.

The effect of age on auto insurance

As mentioned, whether you are buying Ontario car insurance or auto insurance in another province, age is one factor that your insurance company will consider. Although insurers across the country use unique risk calculation algorithms, one thing you can count on is that how old you are will be considered. This is due to the fact that, from an insurance company’s perspective, age directly correlates to risk level.

Generally speaking, this plays out as follows: the younger a driver is, the less driving experience they have, and the riskier they are perceived to be. Conversely, older drivers with years or decades of driving experience are seen as less risky. The result is that car insurance rates for under 25 tend to be higher than those for older adult drivers.

Though it is worth noting that as drivers get even older, auto insurance rates may climb back up again. To further explain the effect of age on auto insurance, we break down a few age groups below:

Drivers under 25 years old

Drivers under 25 years old typically pay the most for car insurance. This is because statistics show that young drivers are at a much greater risk of getting into car accidents than other drivers. While this may be due to several factors, one of the biggest factors is this age group’s lack of driving experience. Since the earliest that a driver can get their licence in Canada is 16 years old, it is impossible to have ample driving experience under one’s belt at such a young age.

Please note that if you wait and do not obtain a driver’s licence until a later age, such as 25, your rates may still be higher since you still have less driving experience.

Adult drivers

Adult drivers in Canada may pay the least amount of money for car insurance, regardless of what province or territory you live in. That said, since rates vary so much between drivers, it is difficult to assign a percentage to how much less you can expect to pay as you enter adulthood. The reality is that auto insurance premiums for adults are dependent on tons of factors beyond age, like your location, annual mileage, local laws, the type of vehicle you drive, gender, how you use your car, as well as your driving record.

Accidents affect car insurance rates, so if your driving record features at-fault collisions or other driving infractions, like speeding tickets, your premium will reflect this. The key to benefitting from cheaper car insurance rates into adulthood is driving safely and keeping your record clean.

Senior and elderly drivers

Finally, senior and elderly drivers often pay less for car insurance than young drivers but more than adult drivers. The pattern with car insurance premiums is that rates are highest when you first start driving, dip down as you enter adulthood, and then increase again as you reach your senior years. The higher cost of seniors car insurance is due to a multitude of factors.

Examples of such factors may include impaired vision or hearing or a slower reaction time while driving, which could increase a driver’s odds of getting into an accident. Thankfully, although seniors auto insurance rates may increase, many Canadian insurance companies offer car insurance discounts to this age group. For example, in Ontario, senior retirees often benefit from discounts.

Other factors influencing auto insurance premiums in Canada

A few other factors that an insurance company will consider when calculating your car insurance premium at any age are as follows:

  • Where you live and commute
  • Model, make, trim, and year of vehicle
  • Past claims
  • Average mileage
  • Driving experience
  • Driving record
  • Insurance history
  • Deductible amount
  • Regulatory bodies
  • How you use your vehicle
  • Gender

Reasons your car insurance rates may go down

Many drivers in Canada want to know when and how they can save on car insurance. BrokerLink is here to provide this information. Below, we outline a myriad of reasons that your auto insurance rates may decrease, ranging from getting older to taking the time to shop around for coverage:

1. You get older

While this isn’t a guarantee, as age is only one-factor influencing rates, getting older may be a reason that your rates go down. As explained above, there is a correlation between your age and how much you pay for auto insurance in Canada.

Younger drivers tend to pay the highest rates, whereas adult drivers pay the lowest. Thus, if you are currently under the age of 25, then one reason your car insurance rates may go down in the future is that you get older and acquire more experience, and as a result, the insurance companies see you as less of a risk and lower your rates.

2. You took the time to shop around and compare prices

Another reason that your auto insurance rates may go down is if you take the time to shop around and compare your options. Too few policyholders research different insurance products and obtain quotes from multiple insurance companies. Instead, they go with the first auto insurance company that shows up on Google.

The reality is that if you want to benefit from cheaper rates, you need to do your due diligence, which means shopping around and comparing quotes to determine which company offers the best coverage at the cheapest price. You can also reach out to a BrokerLink insurance advisor and have them do it for you if you don’t have the time to do this yourself.

3. You raised your deductible amount

Raising your deductible amount may also be the reason that your car insurance rates go down. The deductible is the amount you agree to pay towards an insured loss in the event of a claim. Deductible amounts for car insurance may be as low as $250 or as high as $2,000. Generally speaking, the higher your deductible amount, the lower your premium will be. So if you can afford to pay a higher deductible if you ever need to file a claim, we recommend selecting a higher deductible, as this will result in major insurance savings upfront. Keep in mind that you can adjust your deductible down the road.

For example, when your car insurance policy is up for renewal, review it and if you can afford to increase your deductible, take the opportunity to do so and watch as your rates go down.

4. You installed an anti-theft device on your vehicle

Installing an anti-theft device on your car may qualify you for a car insurance discount, making it another reason that your rates may go down. Before installing a device on your car, speak with a BrokerLink insurance advisor about which insurance companies offer anti-theft device discounts and what conditions must be met to qualify, some insurers require drivers to purchase specific models of anti-theft devices or ones with certain capabilities.

The purpose of an anti-theft device is not only to deter thieves from stealing your vehicle but also to make it easier to locate the car if stolen. That is why many anti-theft devices feature both an alarm, as well as GPS tracking. Since vehicles are most often stolen while parked, you may need to have comprehensive car coverage added to your policy in order to benefit from this discount.

5. You decreased your auto insurance coverage

Downgrading your coverage, such as by removing a type of optional coverage that you had previously added, may also lead to cheaper rates. The truth is that not all coverage suits all drivers, and coverage that once served you might stop making sense at a certain point. Collision and comprehensive coverage are prime examples of this.

While they are often worthwhile for new vehicles or those of high value, as cars depreciate and become less valuable, you may reach a point where this type of coverage no longer makes sense. Choosing to eliminate this coverage from your policy can lead to instant savings, as the more basic your coverage is, the less expensive your premium tends to be.

6. You’ve improved your driving record

An improved driving record can cause your car insurance rates to go down, especially if you got into an at-fault collision that was recently removed from your record. In Canada, when you violate a traffic law and are caught, whether you were speeding, caused a car accident, or drove under the influence of drugs or alcohol, it will appear on your driving record. Minor violations may only show up on your record for a period of three years or less, whereas major violations can remain on your record for a period of five to ten years.

While the infraction is on your record, you are likely to pay an increased insurance rate as your risk level has gone up, too. However, after this period has passed, the infraction will be removed from your record, and you can expect your driving records to go down again, assuming you maintain a clean record moving forward.

7. You started driving a new car

Changing the type of car you drive can cause your car insurance rates to go down. This is because the make, model, and year of the vehicle you drive can have a direct impact on how much you pay for car insurance. So if you recently traded a luxury sports car for something more economical or you downsized from an SUV to a sedan, your rates may go down. Generally speaking, if you want to save money on coverage, research the cars with the lowest car insurance rates and consider buying one of these models.

Reach out to BrokerLink for more information on how age impacts car insurance premiums in Canada

If you want to gain further insight into how age impacts car insurance premiums in Canada, contact BrokerLink today. One of our licensed insurance experts would be happy to explain the various factors that affect rates, including age. They can also provide tips on how to lower premiums, as well as help with other tasks, like renewing car insurance or ordering an auto insurance history report. Reach out by phone, email, or in person to get started today.

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