Updated October 2026
If you've ever added a young driver to your automobile insurance policy or obtained a quote for your teenager's first car, you may have experienced some sticker shock.
Parents often ask us: "Why is the insurance so expensive when the car is older and we're only purchasing basic coverage?"
It's a reasonable question. The answer has less to do with the value of the vehicle and more to do with the risk associated with an inexperienced driver.
Let's look at why young drivers often pay higher automobile insurance premiums in Ontario and what families can do to help manage those costs.
1. Young and Inexperienced Drivers Have a Higher Risk of Accidents
Insurance premiums are based on a number of factors, including the likelihood of a claim and the potential cost of that claim.
Statistically, younger and less experienced drivers are more likely to be involved in accidents than drivers with several years of experience.
This doesn't mean every young driver is careless. Many are responsible, cautious drivers.
However, insurance companies must consider the overall claims experience of drivers with similar characteristics when determining premiums.
Age, driving experience, licence history, previous accidents and traffic convictions can all affect the cost of insurance.
2. Why Doesn't an Older Car Cost Much Less to Insure?
A common misconception is that an inexpensive vehicle should automatically be inexpensive to insure.
While the value of a vehicle can affect the cost of collision and comprehensive coverage, it is only one part of the insurance premium.
Consider a young driver operating a 15-year-old vehicle worth $5,000.
Even though the vehicle itself has relatively little value, it could still be involved in a serious accident resulting in significant injuries or damage to another person's property.
Third-party liability coverage protects against certain financial consequences of these accidents, and the potential liability does not disappear simply because the insured vehicle is older.
Accident benefits and other mandatory coverages also contribute to the overall premium.
The type of vehicle, its safety characteristics, repair costs and claims history may also influence the price.
3. Why Does It Cost More When a Young Driver Is the Principal Driver?
When someone is listed as the principal driver of a vehicle, it generally means they are the person who drives that vehicle most often.
If a young driver purchases their own car and uses it regularly, the insurance company will normally rate that vehicle based on the young driver's characteristics.
This can result in a significantly higher premium than adding the same person as an occasional driver on a parent's vehicle.
For example, a newly licensed G2 driver who is the principal operator of a vehicle may face a substantial premium because they have limited driving experience.
The actual cost will depend on the driver's age, licence history, vehicle, location, coverage and insurance company.
There is no single premium that applies to all young drivers in Ontario.
4. Can You Add a Young Driver to a Parent's Insurance Policy?
In many situations, a young driver can be added to a parent's automobile insurance policy.
If the young driver occasionally uses a family vehicle, they may qualify to be listed as an occasional driver.
This can be considerably less expensive than insuring a separate vehicle with the young person as the principal driver.
However, it is important that drivers are listed accurately.
If a young person is actually the principal driver of a vehicle, they should not be listed as an occasional driver simply to obtain a lower premium.
Providing incorrect information about who regularly operates a vehicle can create serious problems, including complications with insurance coverage and claims.
Always advise your insurance broker when a household member obtains a driver's licence or when the regular use of a vehicle changes.
5. Does Driver Training Reduce Insurance Costs?
Completing a recognized beginner driver education program can help young drivers qualify for insurance discounts.
Ontario's Ministry of Transportation approves driving schools that meet established training requirements.
These programs provide classroom instruction and practical driving experience designed to help new drivers develop safer driving habits.
Many insurance companies recognize approved driver training when calculating premiums.
However, the amount of any discount varies by insurance company, and completing a course does not guarantee a particular reduction.
Before enrolling, confirm that the program is recognized by the Ministry of Transportation and ask your insurance broker about the potential insurance benefits.
6. Does Getting a G2 or Full G Licence Reduce Insurance Premiums?
Ontario has a graduated licensing system that allows drivers to progress from a G1 licence to a G2 licence and eventually to a full G licence.
Moving through these stages can affect automobile insurance premiums.
Ontario's insurance regulator indicates that eligible drivers with a clean driving record should receive a 10% rate reduction for one year when progressing to a G2 licence.
A further 10% reduction for one year may apply when progressing to a full G licence, provided the applicable conditions are met.
These reductions are subject to the relevant eligibility requirements and do not necessarily mean that the driver's total premium will decrease by exactly 10%.
As drivers accumulate more years of accident-free and conviction-free experience, their insurance premiums may become more affordable.
7. What Can Young Drivers Do to Lower Their Insurance Costs?
Although young drivers cannot immediately change their age or driving experience, there are several ways they may be able to manage their insurance premiums.
Complete recognized driver training. Approved training may qualify a new driver for a discount.
Maintain a clean driving record. Avoiding at-fault accidents and traffic convictions is one of the most important ways to build a favourable insurance history.
Choose a vehicle carefully. Some vehicles cost considerably more to insure than others. Obtain an insurance quote before purchasing a vehicle.
Consider occasional driver status where appropriate. If a young person only occasionally operates a family vehicle, this may be more affordable than insuring a separate vehicle. The classification must accurately reflect how the vehicle is used.
Ask about usage-based insurance. Some insurance companies offer programs that monitor driving habits and may reward safer driving.
Review available discounts. Multi-vehicle, home and automobile, student and other discounts may be available depending on the insurer.
Compare insurance companies. Not every insurance company calculates premiums in exactly the same way. One insurer may offer a substantially different premium from another for the same driver.
8. Will Insurance Become Cheaper as a Young Driver Gets Older?
Generally, young drivers can expect their insurance premiums to become more competitive as they gain experience and maintain a good driving record.
However, premiums do not automatically decrease every year.
Changes in insurance company rates, claims costs, vehicle use, location and other rating factors can affect the amount charged.
The most important long-term strategy is to build a history of responsible driving, free of at-fault accidents and traffic convictions.
The Bottom Line
Automobile insurance for young drivers can be expensive, particularly when they are newly licensed and operating their own vehicle.
However, the cost is not simply based on the value of the car. Insurance companies must consider the potential cost of injuries, property damage and other insured losses.
While it may take time for a young driver to establish a favourable insurance history, choosing the right vehicle, completing recognized driver training and maintaining a clean driving record can make a meaningful difference.
Let Us Help You Explore Your Options
At L.D. Dermody Insurance Brokers, we understand that automobile insurance can be a significant expense for families with young drivers.
We can help you compare coverage and premiums from the insurance companies we represent, explain available discounts and make sure the drivers in your household are properly insured.
If your teenager has recently obtained a driver's licence or is considering purchasing their first vehicle, contact our office before making any decisions.
A little planning today can help avoid unnecessary insurance expenses and coverage problems down the road.
This article provides general information about automobile insurance for young drivers in Ontario as of October 2026. Premiums, discounts and eligibility requirements vary by insurance company and individual circumstances.
