Prices vary wildly among companies

Here are some tips for saving money

Learning to drive is a rite of passage; a nerve-tingling, exciting, sometimes frightening experience, especially if you're still at school.

But the worries don't end there. The young driver and his or her parents must also face up to the fact they're going to need auto insurance — and that doesn't come cheap.

Fortunately, there are ways to reduce those costly premiums.

First, shop around. While the insurance policy offered by various companies has the exact same wording, their rates can vary enormously. If you are a parent, don't assume that your current insurance company will offer the best rate when it comes to adding your son or daughter to your policy.

The young person should get at least three years' driving experience as an occasional driver on his or her parents' policy. The savings can be enormous, especially when the time comes for that young person to buy a car and get their own auto insurance.

Second, take an approved driving school course, one that is recognized by insurance companies. The cost of a course can vary from about $500 up to $900, but you (or your parents) will recover that money later thanks to reduced insurance premiums.

Complete the Graduated Licensing Program as soon as possible. Insurance companies give small discounts for every year you have been driving. But most won't give you the discount for four years of driving until you've passed your full G driving test. However, they are required to provide a discount (usually 10 per cent) after you receive your G2 licence and again after you receive your full G licence. The discount stays for one year only.

According to Stephanie Lewis, an insurance broker for 18 years who now works for web-based InsuranceHotline.com, the biggest number of complaints from new drivers come from those who pass the G2 test and then wait several years before obtaining their full G licence.

"The insurance companies are making a fortune in extra premiums from these people," says Lewis. "Not only that but these drivers are missing out on discounts for driving experience."

A new driver can go from G1 to G2 in eight months if she takes an approved driving course. They then have to wait only one year before taking the full driving test.

Know the restrictions on learner-drivers (changes were made last September). For instance, a driver aged 19 or less who completes the G2 test can only carry one passenger under the age of 19 between midnight and 5 a.m. for the first six months. If the driver has had a G2 licence more than six months, or is over age 20, he or she can carry up to three passengers under age 19.

These restrictions don't apply if there's a full-licensed (G) driver with at least four years' driving experience sitting in the front passenger seat or if the passengers under age 19 are immediate family members.

Drive safe and drive smart. Don't get any tickets for traffic violations and don't cause a collision. Premiums will skyrocket if you do and some insurance companies will actually cancel the policy after two convictions.

Now, let's give some examples of differing insurance premiums, starting with the advantages of approved driver training.

We'll take a 21-year-old male with three years' driving experience behind the wheel of a 1999 Honda Accord DX in Toronto. He has $1 million liability coverage and has $500 deductibles for both collision and comprehensive. The premiums shown in the top chart at right are for him alone (not his parents).

The second chart below it shows how accidents and traffic convictions can affect premiums. The rates are for a young male insuring his own car.

Please note that all the chart rates are for male drivers. A young female can expect to pay premiums that are about 30 per cent less because statistics show they are less likely to be involved in collisions or get tickets.

If you are involved in a collision, make sure you go to the nearest Collision Reporting Centre so that your insurance company is made aware of the circumstances. Failing to report a collision can, once again, lead to problems.

Finally, don't let your driver's licence or insurance lapse, even if you don't intend to drive for a year. Otherwise you may have to start all over again when it comes to building your driving experience credits.

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DENNIS MORGAN
SPECIAL TO THE STAR

Copyright Toronto Star Newspapers Limited