What You Need to Know Before You Buy New Car Insurance

Posted on October 5, 2018
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In 2017, Canadian motorists needed an average of $33,464 to become a new car owner. The year before that, they needed only $32,430. In 2015, it was only $30,293.

All these show how average car transaction prices are on the rise, every single year. What's more, that's not the only expense car buyers need to worry about. There are vehicle maintenance and gas top-ups to think about too.

As if those costs aren't enough, there's also new car insurance premiums and rates. Factor in depreciation, and you're looking at a yearly car ownership cost of between $8,600 and $13,000!

The good news is, car ownership doesn't have to be that big of a burden. If you plan your new car and insurance purchase right, you can save a lot.

That's exactly what we'll share with you in this post, so be sure to keep reading!

Is New Car Insurance Mandatory?

Well, if you're going to drive that new car, then yes, the law requires you to get insurance too. Auto insurance is a legal requirement, wherever in Canada you may be.

That makes complete sense since you'd want protection whenever you drive. Especially if you often have other people who ride with you. Your insurance protects you and your passengers.

More than that though is the fact that your policy also covers pedestrians. If the vehicle accident results in property damage, your insurance covers that too.

Keep in mind that as of 2017, there were 34,320,737 registered vehicles in the country. While you may not share the road with all them at the same time, that number still presents a high risk for accidents. In fact, in 2016 alone, there were 160,315 reported injuries due to vehicle traffic collisions.

These figures should tell you that driving without insurance isn't an option. You need car insurance if you're going to drive, period.

Ensuring You Have Adequate Insurance Coverage

Your primary goal is to keep your insurance rates low, but that doesn't mean skimping on your coverage. You need to make sure it at least meets mandatory insurance coverage laws.

In Canada, all provinces and territories need their drivers to get mandatory coverage. The amount of coverage varies from province to province though. So, be sure to check with your local government for the exact amount.

Mandatory auto insurance requires you to get enough of these two coverage types:


This coverage kicks in if your car causes losses to other people. That includes damage to other vehicles, injuries, and death.

So, what if the damage or losses exceed your liability limit? Then you'll face out-of-pocket expenses to cover the rest.

Note as well that liability insurance won't cover your vehicle's own repair costs. You'd need to have additional collision coverage for that.

Accident Benefits

Depending on where you live, accident benefits also include bodily injury insurance. It covers your medical expenses if you sustain injuries following a car accident. It also pays for any loss of income you experience after the crash.

In some parts Canada, such as Quebec, you automatically receive bodily injury coverage. The cost of your driver's license registration includes payment for this coverage's premiums. As such, you don't have to get additional coverage for bodily injury.

Checking Policy Offers for Additional Auto Insurance Coverage

Whether your policy already includes additional insurance coverage depends on the insurer. Some car insurance companies include these in their packages, so keep that in mind as you shop around.

Collision Insurance

As mentioned above, this is the insurance that pays for repairs or replacements for your own car. For instance, a road crash has resulted in your ride now having a huge dent on the driver's door. In this case, your collision insurance will kick in and pay for its repairs or replacement.

Be sure to check with the insurance company if they include this in their policy offers. Again, some insurers already include it as part of their products.

Comprehensive Insurance

Road traffic accidents and collisions aren't the only cause of vehicle damage. There's also theft and vandalism to worry about. If you want to protect your ride against these, you'd want to have comprehensive insurance.

Who Your Car Insurance Policy is For

Of course, there's you, the new car owner. But your policy should also provide coverage for all your other passengers. That way, if you're involved in an accident, your policy also pays for their injuries or losses.

Your policy should also protect anyone else involved in an accident.

If your passengers have their own policy, they may need to call their own insurer first after an accident. Some provinces require this as part of the insurance claims process. The same goes true for anyone else with involvement in the accident.

Less Expensive Car May Mean Lower Auto Insurance Costs

Again, even if auto insurance is mandatory, it doesn't mean it should be too pricey. One way you can reduce costs is to factor in insurance when buying a new car before you actually make the purchase.

That's right. The kind of vehicle you'll drive and insure will influence your insurance rates. This factor can make so much difference that you may pay thousands less every year.

That said, if you haven't bought your new car yet, consider looking at models known for being cheap to insure. Some of these include the latest Chevy Cruze, Toyota Prius, and Kia Sedona. 2018 Ford Focus, Nissan Versa Note, and Hyundai Elantra models also make it to the list.

One of the main reasons these vehicles are cheap to insure is their brand's reputation for safety. It also doesn't hurt that their parts are easy to find and replace. Keep in mind that there are many other factors that'll drive your auto insurance rates though.

Age Matters, But So Do Your Driving Behaviors

As much as we'd like to tell you otherwise, age matters when you're a driver. This is even more obvious once you're looking at age-based insurance rates.

In general, the older you get, the less you pay towards your car insurance. Why?

First is experience or lack thereof. Younger drivers' inexperience can lead to higher accident risks. That may seem like an unfair generalization, but studies like this back this up.

There's also the link between young people's risk-taking tendencies and their driving behaviors. These tendencies make them more prone to road accidents and collisions

As you can see, insurers have a basis when they charge younger drivers those high rates. To be more specific, young male drivers pay the most out of all motorists because of all these risks.

So, does this mean that if you're 25 or older, you'll enjoy cheaper rates? In general, yes. But your age isn't a 100% guarantee for lower auto insurance premiums.

That's because aside from age, driving behaviors can also determine your insurance rates. If you have a clean driving history, you can pay thousands of dollars less for your insurance every year.

Keep Your Driving Record Clean for Better Insurance Rates

In general, people with a clean driving record pay less than those with a bad record. By that, we mean thousands of dollars less every year.

Drivers with a record of multiple accidents are high-risk drivers, after all. Because of their history, insurers believe they'll make more claims in the future. That's why they pay so much more for their insurance.

Traffic violations also indicate what kind of driver you are. So, if your record shows you've had numerous speeding tickets, expect to pay more for insurance.

As such, be a prudent driver at all times, or at least, as much as possible! Don't fall into the temptation of running a red light, no matter how late you may be for that date. Always keep your speed in check, because every ticket you get will pull your auto insurance rates up.

These insurance tips are not only to secure the lowest possible rates. They're for your own safety, and the well-being of other people you share the roads with.

Car Insurance Comparison is Key to Finding the Best Policy for Your Needs

This is especially true if you live in Ontario, the province where drivers pay the most for car insurance. In 2016, Ontario motorists paid $1,437 for their auto insurance on average. That's 19% higher than Alberta and a whopping 65% more than Atlantic Canada.

But comparing vehicle insurance isn't only a must for Ontario drivers. Everyone who'll buy a new car, get a new policy, or up for renewal should. For the simple reason that it's one of the best ways to find not only the most affordable but also the right policy.

Always remember that your premiums will vary depending on the insurer. As such, the quotes you receive from one company may almost always be different from that of another. So, the only way you can find out which ones offer lower rates is to compare.

One last tip: You may save more if you combine your car insurance with your home insurance. Some insurance companies offer both policies and may offer you a discount if you get both from them.

Don't Let Pricey Car Insurance Rates Take the Fun of Driving Away

As you can see, a new car insurance policy doesn't always have to be a financial burden. What's more burdening are the out-of-pocket medical costs from car accidents.

So, don't skimp on auto insurance! Besides, there are plenty of affordable options, not to mention cost-reducing strategies. Follow the above car insurance tips we've given, and you're on your way to securing a lower-cost policy.

While you're here, you may also want to check our other auto insurance tips and tricks. In fact, feel free to browse our other insurance-related guides and advice!

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