Assuming that you have a good driving record, once you turn 25 years old your insurance premiums typically decrease. From the perspective of insurance companies, at the age of 25 you are considered to be an experienced driver and are less likely to be involved in an accident, and you’ve most likely been driving for several years. Subsequently it makes renting a car much easier and cheaper, as rental car companies will have less restrictions after you turn 25, because you’ll be a less risk for getting involved in an accident with one of their vehicles.
What if I still live with my parents?
If you are living at home with your parents, and don’t own a vehicle you don’t need to have your own insurance policy. There are no age restrictions on remaining on your parents policy as long as you live in the same home. If your under the age of 25 you’ll be charged a premium as an occasional driver or a principal driver depending how many vehicles are in the home. If you are over 25 you could be listed as a secondary driver free of charge, or a principal driver with a premium associated with it.
If you live at home but you own your own vehicle (its registered to you) you need to purchase your own insurance policy. One of the biggest misconceptions is that if you own a vehicle, drive it, but have your parents as the policy holder you’ll have cheaper insurance – this is not the case. Your insurance premium is purely based on the drivers operating the vehicle(s). Also, no other person can insure a vehicle that they don’t legally own or have no financial interest in.
Considerations for your first car
Regardless of your age, you need to be properly covered and be rated correctly for the use of your vehicle. If you are involved in an accident the few dollars that you saved on your policy might not matter. Gaps in coverage could result in large medical claims not covered or the physical damage to your vehicle not covered.
For new vehicles or vehicles with car loans you’ll typically be required to carry comprehensive and collision coverage. With new vehicles (you’re the original owner) you’ll want to purchase waiver of depreciation coverage. We all know that once you get a new vehicle as soon as you drive it off the lot the value plummets. The waiver of depreciation coverage prevents this from happening, and if you’re involved in an accident the insurance company is obligated to pay out the exact price you payed for the vehicle.
You’ll also want to review your liability limits. The Ontario mandatory liability limit is $200,000, but in our offices we don’t insure anyone for less than $1,000,000 and we highly suggest $2,000,000. The difference in premium from $1 million to $2 million can be as low as $50 a year, and it’s worth every penny.
Keeping my rates down
At the age of 25 you might still be living with your parents and could be eligible for multi-line discounts using their auto or home policies – provided they’re with the same insurance company. Or perhaps you’ve moved out of the house and have purchased your own home policy or tenants package, that will give you a multi-line discount as well if they’re both with the same insurance company. Other discounts to consider are:
- Good student discounts (over 80% average)
- Recent graduate – good student discount
- Telematic programs that monitor your driving habits
- Winter tire discounts
- Driver training programs