Our two sons, aged 23 and 25, have finally moved out of the house and to another city. They’ve been occasional drivers on our auto insurance policy ever since they began driving and now they have full G licences and five-star ratings, but they don’t own cars. Removing them from our policy drops the annual premium for our two cars from $3,000 to $2,000. But if my sons aren’t on the policy, will they be treated as brand new drivers when they finally buy cars and get insurance of their own? Will they have to pay much more expensive premiums? My understanding has always been that if somebody is not named on an insurance policy for even a day, the insurance company will pronounce them as nondrivers and will revert to a novice rating for their record. – Mark, Toronto
Absence may not make your insurance company’s heart grow fonder, but in Ontario at least, they can’t hold it against you. If you’ve had car insurance previously and then choose to stop being insured – for instance, because you sold your car and decided to take transit – you won’t have to start from scratch as a brand new driver if you get insurance again, said the Insurance Bureau of Canada (IBC).
“There’s legislation in Ontario that prohibits them from using a lapse in insurance coverage to raise your insurance premiums,” said Rob de Pruis, IBC’s national director of consumer and industry relations. “There are exceptions if you lost coverage for very specific reasons, like a suspended licence or fraud.”
While the rules vary by province, insurance companies are allowed to base your premium on certain risk factors. In Ontario, these include how often and how far you drive, your age, your gender, where you live and your driving record, de Pruis said.
Generally, companies don’t reveal how much weight they place on each factor.
When it comes to your driving record, companies typically rate you based on how many driving convictions – such as speeding tickets – and at-fault collisions you’ve had in the past six years.
In Ontario, if you’ve had a clean driving record for the past six years, you’ll get a five-star rating. The star rating goes by different names, depending on the province.
While at-fault crashes and tickets can reduce your star rating, a gap in your insurance coverage won’t in Ontario, de Pruis said.
So, if you sold your car in 2017, weren’t insured for five years, and didn’t have any at-fault crashes or tickets during that time, you wouldn’t lose that rating.
The car you’re insuring matters, too. Insurance companies set rates for vehicles mainly by looking at claims and safety data for other cars of the same make, model and year.
And newer drivers typically pay more. So, a 25-year-old in Ontario with a five-star rating will pay more for insurance on a 2020 Honda CR-V than a 40-year-old with the same rating.
Mind the gap?
But in most other provinces, insurance companies can consider a longer break when setting rates – although that doesn’t mean you’ll be considered a brand new driver, de Pruis said.
“In Alberta, a lapse longer than two years could have an impact on your premiums,” he said, adding it is difficult to predict how much higher premiums could be because so many factors drive insurance calculations.
In the three provinces with government-owned insurance companies – British Columbia, Saskatchewan and Manitoba – drivers gain discounts for the years they’ve driven without tickets or at-fault collisions, even if they didn’t have insurance coverage.
“A driver does not have to have a vehicle actively registered or an insurance policy to continue to earn [experience] points for each year of incident-free driving,” Tyler McMurchy, spokesman for Saskatchewan Government Insurance (SGI), said in an e-mail. “However, the driver does have to have a valid driver’s licence – not suspended or expired – in order to continue to earn points.”
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