Want your teenager to drive? Expect to pay a whole lot of insurance – for now | Canada Voices

If you want your teenager to drive, it’s going to be expensive. There’s no way around it.

Young drivers have more accidents, and because your kid doesn’t have a driving record, insurance companies are going to see them as high-risk.

Premiums are high, and for many families that cost will strain their cash flow or be outright unaffordable. Since the biggest factor in setting premiums is driving experience, parents find themselves in a bind: in order for your child to get more reasonably priced insurance, they need a driving record.

That means years of being insured without any tickets or at-fault accidents. But in order to get there, you have to pay high premiums for an unknown amount of time – at a cost that is tough to predict. It’s frustrating.

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It’s difficult to generalize the cost of insurance but in Ontario you can expect to pay between $1,000 and $3,500 a year to add your child to your policy. My son is 19, has been driving for about a year, and we pay $1,476 a year, which includes some discounts. My editor’s son started to drive when he was 17, and his insurance was around $3,500 a year. It dropped by about $1,000 once he turned 18.

As a parent, you need to decide whether the high cost is worth it. Kids who live in a city might not need a licence and can get around just fine using their bicycles or public transit. Living in the suburbs or a rural area is a different story.

There’s another reason you might want to insure your kid: driving experience. Even if they don’t have much of need to drive now, that can change quickly.

Having a licence and being a confident driver can open up job opportunities further from home and give them freedom to explore and mature. It can also lower their premiums when they are young adults – when driving might be a necessity, not a choice.

Premiums for new drivers are determined by many factors, such as where you live, how many kilometres you drive each year and what kind of car you drive. Gender and driving experience are also huge factors for young drivers.

This leaves parents at the mercy of insurance companies. But there are a handful of things that can lower your costs, and using every option available to you can make a difference.

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Send them to driving school. By taking a course with a driving school, most insurance companies will lower your premiums – by up to 20 per cent. You just have to make sure the driving school is on the list of approved providers in your province.

Ask for discounts. There are other types of discounts available, so be sure to explore all avenues. Do an internet search before calling the insurance company for a quote so you know specifically what to ask for. For instance, you might get a lower rate because you are a member of a professional, alumni or employer organization, or if you bundle your auto policy with your home policy.

If your child is going to postsecondary school, they will likely get a student discount, which is often 10 per cent. These discounts can be significant in dollar terms given the high cost of premiums. If your premium is $2,000 a year, even a 10-per-cent discount is $200. And if you can get more than one type of discount, it actually makes a difference.

Shop around every year. Getting quotes from several companies is a must. “Appetites differ significantly from company to company. The insurer that is offering you the best rate for your profile isn’t necessarily the one offering the best rate for your child’s profile,” says Daniel Ivans, a licensed insurance broker with Rates.ca.

Things can change from year to year. Don’t assume that the company who gave you the best quote last year will be best option this year. It’s not fun shopping for quotes, but it could save you hundreds of dollars a year.

Encourage them to get their full licence as soon as they can. Every province sets the rules for licensing, but all have a graduated system. Drivers who get the full licence will have lower premiums. In Ontario, getting the full G licence can reduce costs by 10 to 20 per cent.

Car insurance for your teenager is going to be expensive. But take heart: As they build a clean driving record, the costs will come down.

Anita Bruinsma is a Toronto-based certified financial planner and a parent of two teenage boys. You can find her at Clarity Personal Finance.