Have you seen your car insurance premium jump after your child received their G2 license? You know that auto insurance for young drivers can be expensive if you’ve been there. But, there’s hope for improving those elevated insurance rates: Provided your kid maintains a good driving record. Is 25 a universal milestone for a car insurance discount?
Unfortunately, no. Insurers typically don’t offer a specific discount for any driver who is 25 or older. Age is undoubtedly a factor that insurance companies use to calculate insurance rates, but 25 won’t necessarily be the age when your child experiences the most significant decrease in their insurance costs.
In 2017, LowestRates.ca reviewed their auto insurance quote data and found that the most significant drop in auto coverage rates occurred between 20 and 21. So, in addition to being another reason why your kid’s 21st birthday is a milestone, these findings indicate a measurable trend of gradually decreasing insurance prices between the ages of 17 and 25.
Therefore, it is certainly possible that the cost to insure your child will decrease upon renewal after they turn 25. However, a young person’s insurance rates may drop the most when they reach a different milestone age in their 20s.
On the other hand: If a new driver gets their G1 license when they are already in their 20s, they will probably receive a similar experience-related rate decrease at an older age.
Why Is 25 The Age Often Associated With Discounts For Young Drivers?
Insurance companies consider drivers aged 16 to 24 the most high-risk age category. Therefore, when your kid is no longer under 25, insurers stop associating them with the highest risk of severe insurance claims.
● In 2014, The Globe and Mail reported that despite making up only 13% of drivers, those in the 16 to 24 age group were behind the wheel for 24% and 26% of accident fatalities and serious injuries, respectively.
● This segment of young motorists is also responsible for 40% of speeding violations, according to the Canadian Association of Chiefs of Police (Carsurance.net, 2021). Moreover, drivers 16-24 are involved in 80% of speeding-related traffic fatalities with victims of the same age range.
● According to the Traffic Injury Research Foundation, drivers aged 16 to 19 are 30% more likely to be killed in a car accident than drivers over 19.
The data regarding young drivers concerns parents and insurers alike: Insurance companies don’t know your kid as well as you, so they need time to learn how they drive to be comfortable offering them cheaper coverage.
Teenage male drivers are most likely to be involved in more severe accidents. However, as male drivers age and prove to be safe drivers, they can see the most significant drop in their premiums as they move towards price parity with their female counterparts.
Could My Kid End Up Paying More For Car Insurance After Turning 25?
Marks against a driver’s record like an at-fault accident or a traffic violation can lead to more expensive insurance at any age. If your child continues to drive safely and stay accident and major-ticket-free, it’s reasonable to expect that their insurance rates will become more affordable by the time they reach 25, but there are exceptions.
● Some insurers offer discounts for post-secondary students under 25, which could increase insurance rates after a driver’s 25th birthday. Still, older, experienced drivers are typically cheaper to insure than students.
● Suppose you insure your child as an occasional driver under your policy when they are away at university. If they move back home, this could increase your premiums if they begin driving your vehicle regularly, especially if they need to commute long distances.
● Once someone gets their license, a gap in insurance coverage can make insurance more expensive at any age. So if your kid isn’t covered under any auto policy, say between the ages of 22 and 24, this could make purchasing coverage at the age of 25 less affordable.
What Else Affects The Cost Of My Kid’s Insurance?
Every driver is unique, and age is just one piece of information that insurance companies use to calculate rates. Many lifestyle changes can impact insurance rates throughout a driver’s life.
These factors may be associated with more mature drivers, but someone under 25 could also save on car insurance by:
● Moving to a safer neighbourhood located further away from highways and intersections with high accident rates.
● Bundling a home and auto insurance policy.
● Buying a newer vehicle with a top safety rating.
● Cutting out commuting by working 100% from home can qualify a driver for a leisure driving discount.
In contrast, young motorists are more likely to drive less expensive vehicles without comprehensive or collision coverage to pay for vehicle repairs or replacement in the event of an accident. Having limited auto insurance coverage can reduce the cost of insurance premiums at any age, but this is risky because it could make an accident much more challenging to recover from financially.
Young drivers are also more likely to complete accredited driving courses, which can help them qualify for an insurance discount.
Unlike car rental companies in Ontario, there isn’t a specific surcharge that insurance companies drop as soon as a driver turns 25. However, all other factors being equal, your kid can look forward to at least a modest break on insurance premiums as they age out of the “higher-risk” 16-24 age bracket.
Every new driver is considered a higher risk than an experienced driver with a stellar record. You can’t change your kid’s age, but you can ensure they stay covered and help them take steps to be a safe and well-educated driver.
Don’t forget to set an insurance-savvy example by ensuring you have the best coverage for the best price! Of course, qualifying for a loyalty discount from your current insurer is excellent. Still, it can pay to get a quote from an insurance brokerage before your policy renews, so you know who can offer you the best deal.
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