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What every Canadian student should know about auto insurance

When the average amount of Canadian student debt is around $28,000, the cost of auto insurance must be considered. Venturing into post-secondary life gives students a more realistic idea of what it costs to be in the adult world. Even with scholarships available, the cost of college tuition has risen steadily. Students must examine the options of what is affordable and financially feasible.
From an industry perspective, said Steve Kee, speaking on behalf of the Insurance Bureau of Canada, young drivers tend to pay higher rates because of the risk factor involved.
"Car insurance premiums vary according to the likelihood of your car being involved in a collision or otherwise damaged, or being stolen," he added
And how to lower those insurance fees? Having an accident-free record, for starters. As John Bordignon of State Farm of Canada pointed out, "Roughly 13 percent of licensed drivers in Canada are 16-24 years old, yet 24 percent of fatalities and 26 percent of serious injuries on the road tend to be attributed to this young age group; these numbers are alarming and disproportionate," he said.
Programs such as the Graduated Drivers Licenses (GDL) work by limiting a student’s exposure to high-risk situations and by requiring that they have more hours of supervised practice before they drive independently. Evidence is strong, noted Bordignon, that by having a young person complete a GDL gets them familiar to the rules of the road which increase safety awareness.
A safe-conscious driver is more likely to have fewer incidents on the road and with a good driving record, auto insurance rates can be more favorable to the consumer.
Also, age matters, said Kee. A driver who is 16 to 24 will automatically face a higher premium, he explained. "A 25-year-old driver with a clean driving record will cost you substantially less than if he or she were 24 and had the same clean record," Kee added. "The key factor is your kid’s driving record and age ratio." Also, Kee said, if your son or daughter is a part-time driver of your vehicle, the cost will be incrementally less than if he or she is a full-time driver.
Kee also pointed out that it is important for parents to know their teen's driving record. "Does your young driver have a few speeding tickets on her or his record?" If he or she is added as a secondary driver on your policy, he said, a spotty driving record could cost you a better rating, regardless of age.
Educate Yourself
If a student does choose to get his or her own insurance, be sure to shop around for best rates and options, Kee echoed.
He added some insurance companies offer discounts to experienced drivers, especially to those who insure more than one vehicle with an insurance firm. Picture a university student with an insured car on campus and one at his parent’s place.
Also, drivers with no claims for a certain period of time can be offered discounts. And, in the case of young and new drivers, those who have passed an accredited driver training course can benefit with a discount.
Kee also mentioned that, "if a teenager is licensed at 16 and made an occasional operator on Mom and Dad’s insurance policy, then five years later the teenager can purchase a car and insurance policy of his or her own." And that student will have five years of driving experience, and, presuming a good driving record, will be in a good insurable position.
"If they were never listed on a policy for those five years, they will be treated as a brand new driver at 21." Yet, as Kee also noted, "that will ensure a higher cost."
The variety of insurances, companies and types of policies out there can be overwhelming. Kee said it is important for parents to take into account the major challenges of securing the right insurance for their children.
"Your son or daughter gets no credit for claim-free driving unless they have a traceable insurance record. And they have no insurance if they reside in the household, but are not listed as a driver. The risks could be very serious financially," said Kee.
Automatically, you can usually expect an increase in premiums by adding another driver to your policy. With the exposure a new driver brings, your insurance company will do an assessment to see what kind of increase you can expect, explained Kee.
No matter the option students choose, auto insurance should remain top of mind, even when their campus lives are already weighed down by essays, tuition fees and the Freshman Fifteen.
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