One of the few ways a first time car buyer can make sure their car insurance premiums stay low is by buying the right vehicle, but car insurers have a rather complex way of determining how much the premium should cost.
While most people understand safer and cheaper cars are less expensive to insure, not all first-time car buyers are aware that newer and more expensive models have the potential to drive up car insurance quotes. That’s because newer and more expensive vehicles cost more to replace.
In the event of an accident, the insurer risks paying out a larger sum of money. For instance, to repair or replace a 2018 Audi A4 compared with a 2009 Subaru Outback, a risk that directly translates into the insurance premiums.
However, some older, less expensive vehicles are seen as less safe, so it’s not a hard and fast rule. For instance, a 2018 Honda Civic will cost $24 less in premiums per month than a 2015 model, according to our Ontario car insurance calculator. Older models typically incur lower premiums. But, new tech in auto like advanced safety features and immobilization locking devices could actually increase the price of insurance due to high cost of repairs.
How insurers price vehicles
Vehicle brands and model years are rated riskier or less risky, determining their cost to insure, using the Canadian Loss Experience Automobile Rating (CLEAR).
CLEAR determines how much an insurance premium for a vehicle should be, based on car insurance claims data from Canada and the U.S.
Anti-theft devices, anti-lock brakes, top-notch tires, side-impact door reinforcements as well as dual and side airbags all create a lower auto insurance quote under the CLEAR system.
But it doesn’t stop there.
Your age, the area in which you drive, your daily commute, how many kilometres are also factors. If you’re looking for car insurance in Brampton, with a high rate of fraud and uninsured drivers, expect to pay more than someone in neighbouring communities like Georgetown or Milton without those detrimental factors.
Best first car to buy for a teenager
In 2017, the Insurance Institute for Highway Safety (IIHS) made more stringent criteria in recommended cars for teens.
The institute warns high-horsepower vehicles would result in higher insurance premiums while electronic stability control would result in lower premiums. How a model has performed on the roads historically is also of importance. If the car typically gets into accidents, it will cost more to insure, despite it having nothing to do with the car.
Taking the time to compare car insurance for old, new and used vehicles with these factors in mind can help the new driver find the right price.
A selection of cars with cheap auto insurance for first time buyers
This may all seem quite daunting, but luckily the Insurance Bureau of Canada aggregates how insurers rate each vehicle make, model and year. Ratehub.ca went through the data and found some of the vehicles with the least number of claims, thefts and reported incidents, which would result in lower premiums.
Here are some of those vehicles with the best overall ratings from Canadian insurers. Pricing is provided by Autotrader.ca:
Sedans are losing a bit of popularity. Not quite the storage capacity of an SUV, not as cheap or small as the cheapest cars in Canada, either. Also, they are generally more expensive to insure than an SUV, Minivan, or truck.
As we mentioned before, trucks can be really cheap to insure, despite taking 80-90% of the top ten most stolen vehicles in Canada every year. Trucks, for a first time car buyer certainly have an allure to them; an aura of ruggedness. They have great storage capacity (if you want to move your friends everywhere), but if you want any more than 2 passengers, you’ll need a larger cab that can certainly increase the purchase price.
SUVs have taken the market by storm in recent years. They have storage for camping trips and hockey tournaments and comfortable seating for a family of 4. Check out our blog on the best SUVs in Canada to look at their financial comparison.
Are you paying the best price for car insurance?
What to keep in mind when buying a car
First time car buyers and new drivers should know the most popular cars in the country aren’t the cheapest to insure and even if a vehicle’s brand might be built around its image of safety, insurers’ data may contradict the marketing.
Best practices like checking vehicle components for product recalls will help avoid both a buyer’s remorse and an insurance nightmare. Drivers can check Transport Canada’s Motor Vehicle Safety Recalls Database and simply search a vehicle to find if it is affected by a recall.
Always consider how much you can afford and the total cost of ownership because you don’t want to be car poor, barely affording car payments, maintenance, gas, and insurance. You still want a life outside of your car and not just sitting at home watching Netflix.
The Bottom Line
Understanding how insurers make their premium calculations can help a first time car buyer and a new driver save money. The age of the vehicle, its safety, value, history of accident claims, the likelihood of being stolen all factor into the insurance premium. The more points a new driver can score with an insurance company, the less they have to pay.