Things a first time car buyer should know

willkoblensky
by Will Koblensky January 15, 2020 / No Comments

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 few warnings when buying used

  • A used vehicle might have been modified, which could result in the insurer denying a claim.  You should ensure there is a CARFAX report and you could even run the specs by an insurance broker prior to buying a used vehicle.
  • If you’re leasing or financing the vehicle, the lender will likely require comprehensive and collision coverage to protect the shared asset. Those additional coverages will push up the price of first time car buyer insurance, who rarely purchase their vehicle outright.
  • Another major factor here is how popular a given vehicle is with carjackers. While the Ford F series is a reliably safe pickup truck, for example, it’s also the 10th-most stolen vehicle in Canada year after year, increasing the cost of insurance for trucks (but trucks in general are often cheaper to insure.

 

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:

SEDAN
Make/Model Used Price
Chevrolet Optra 5 door, 2005 ~$3,000
Mazda 6 Sport 5 Door, 2003-2005 ~$7,000
Mazda MX5 Miata Convertible ~$10,000

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. 

TRUCKS
Make/Model Used Price
Dodge Dakota >2007 ~$10,000
Ford F-150  ~$10,000
Mazda B Series 2003-2008 ~$7,000

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. 

SUV/WAGON/CROSSOVER
Make/Model Used Price
Ford Explorer <2008 ~$10,000
Subaru Outback Wagon AWD ~$9,000
Volvo V70 Wagon AWD ~$6,000

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. 

Wondering how much a you'll pay for insurance?

Compare personalized car insurance quotes from Canada's top providers for free!

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. 

Best car to buy as a first car

Finding the Goldilocks option takes a fair amount of research. But the good news is there are a lot of safe yet stylish vehicles that improve a driver’s insurability.

  • Both the Chevrolet Malibu and the Ford Fusion are stylish vehicles and well regarded by insurers. But the Malibu may cost $60 less in monthly insurance premiums. It’s a more reliable vehicle, has less acceleration power and is slightly cheaper than the Fusion.
  • There are some vehicles that age better than others. So keep it in mind when choosing your vehicle’s make and year.  For instance, a 2017 Ford Taurus costs roughly the same to insure as a 2017 Chevrolet Malibu, but a 2010 Ford Taurus is $17 cheaper to insure per month than a 2010 Malibu.
  • Out of production cars that are still on the market can be less expensive to insure.  Let’s look at the Mazda Protegé – with fewer of them on the road, the less they are getting into accidents, making that vehicle less risky to insure.

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.

ALSO READ