How to lower insurance costs

New drivers

Krystyna Lagowski

National Post

New drivers who have completed training from a recognized driving school are automatically rated three-star drivers, meaning lower premium costs.

Even though they have never driven, new drivers find themselves categorized as high-risk -- and high-cost -- to insure.

The first means of cutting down on insurance cost is to obtain insurance as a second party on an existing policy, such as a first-time driver's parents or spouse's insurance.

The new driver is essentially riding on the primary driver's existing track record, but remember -- it is important for the new driver to maintain a clean driving record so as not to sully the primary driver's record. Otherwise, costs will go up for both drivers.

Parents will also find insurance companies charge lower premiums if their teenager is an occasional driver of a vehicle. They can save even more if their child is the occasional driver of the family beater.

And a new driver who has completed training with a recognized driving school automatically is rated a three-star driver. "Without any recognized driver education, the first-time driver starts out as a zero-star driver," says David White, a spokesman for Young Drivers of Canada. "At least with a three-star rating, you're a little farther ahead in the game."

Kevin Bavelaar, owner of Auto Showplace in North York and board member of the Ontario Motor Vehicle Industry Council (OMVIC), suggests calling the insurance company directly and getting its recommendation before buying a car for the new driver. "Find out what's the cheapest car to insure for a young kid. Get a list and start with that."

Anthea McFarland, personal lines service/claims manager for The Hub Group Ontario Inc., says the kind of car being driven makes a big difference in insurance costs. "Look at the safety aspect first. You want a four-door with a four-cylinder engine and no more than 120 horsepower."

A good choice would be in a low "CLEAR" (Canadian Loss Experience Auto Ratio) rating group -- a system used by the Canadian insurance industry to rate vehicles by different categories. Categories include collision and theft, how various vehicles would stand up in an accident, or which are stolen the most. The lower the rate group, the safer the vehicle because the chance of loss is lower.

"You're definitely not going to buy a brand-new vehicle, because the cost of insuring a teenager is so high," Ms. McFarland says. She recommends buying a used car and carrying only liability on it. "We have a lot of males under 25 who can't afford to pay full cover, but as long as they have $1-million liability and their accident benefits, they can legally drive that car."

As an example, she offers an 18-year-old male with driver training, which automatically makes him a three-star driver, on a brand-new Honda Civic, paying anywhere from $3,000 to $4,000 a year in insurance. "But, if he buys a 1990 Honda and carries only liability, he pays only $2,000."

Some import cars are more expensive, such as Volkswagens and Hondas. "Go domestic," Ms. McFarland says.

Bear in mind the vehicle will have to pass emissions standards tests and also be subjected to a mandatory pre-insurance inspection. The inspection makes a record of any pre-existing damage, as well as factory-installed stereo equipment.

"If I'm a thief and I see a super-duper stereo in a car, I'm more likely to break into it than one with a factory-installed stereo," Ms. McFarland says. "You'll pay more insurance for a car with upgraded equipment like that."

However, an upgraded security system may entitle new drivers to a discount, but only certain kinds of systems are eligible. For more information, new drivers can check out the vicc.com Web site or contact their insurance brokers.

Finally, a unique insurance concept known as the "I Promise" program is being proposed to many Canadian insurers. The "I Promise Program" allows new teenage drivers and their families to make a deal to promote safe and responsible driving by all parties.

A nine-page, parent-teen contract outlines promises, including "I promise to drive safely, I promise not to drink and drive, I promise to use my seat belt." A decal with a toll-free number is prominently displayed, giving other drivers a means of reporting bad driving.

The program originated in Canada, and was created by Gary Direnfeld, a Dundas, Ont., resident. For more information, log on to www.ipromiseprogram.com

Gary Direnfeld – (905) 628-4847 gary123@sympatico.ca www.ipromiseprogram.com