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Most new drivers expect to pay higher insurance rates at least for the first year that they are driving. They also expect that the rates will decrease after the first year at least. Even experienced drivers have the same expectations. But often it never turns out to be this way.

Can I Expect a Vehicle Insurance Premium Decrease After the First Year?


There is an answer to expecting a premium decrease after the first year for insurance. But is going to depend on many factors. It is because there are so many different metrics. These metrics come into play with determining insurance costs. A lot of drivers don’t realize that vehicle insurance is a personalized service. Many are of the impression that all insurance companies are the same. These are just two factors at that come into play with determining insurance costs. As a result of this, it can affect what happens to the insurance cost after the first year. Many insureds face disappointment at their first-year insurance renewal. Some may find that the premiums have gone down. Others may find that the insurance cost has actually gone up.

Why is My Vehicle Insurance Not Going Down?

Focusing on why the insurance is not going down means looking at two periods of time. It means looking at the period when the premium was first set. Then it means looking at the period of the insurance renewal.

The First Purchase of the Insurance

The insurance companies screen who they are going to take on as clients. To do this, they look at many different factors. There are some major categories of interest that they will put their attention on.

The Driver

To understand insurance premiums, it’s important to understand what vehicle insurance is. Vehicle insurance insures the driver, not the vehicle.

Driver expectation is for them to perform driving tasks safely and efficiently. It is what is important. Insurance companies want to minimize their risks as much as possible. They have to depend on the driver to be able to do this. So,  the experience that the driver has plays a big role in mitigating the risks. It is for this reason that new drivers have higher premiums. They do not have the experience that the insurance companies are comfortable with.

Insurance companies rely on driver history. They use this to give them a clear picture of the drivers intent and capabilities. New drivers do not have this history for the company to rely on. Insurance companies are not in the business of giving the benefit of the doubt. They want solid data to show that a driver has the skills and drives in a responsible manner. Experienced drivers that have a poor driving record are not displaying positive responsibility. This is factored into the premiums.

The Vehicle

Insurance is on the driver, not the vehicle. But the insurance companies will take into account the make and model of the car. As it pertains to what the driver is buying insurance for. There are factors about the vehicle that play a role in the risk the insurance company is facing. For example, a high powered sports vehicle puts the insurance company at a higher risk. If the vehicle is prone to theft again this is another risk for the insurance company.

The Demographics

Where the driver is parking, the car and driving play a role in the demographics. Insurance companies gather a lot of data to rely on for premium setting. This data can pertain to the province, city and even neighbourhood as it pertains to the driver. Whatever the statistics are showing based on this will help to determine the premium.

The Metrics

There are other metrics that come into play that also affect the insurance premiums. These can include the gender of the driver. Plus the age. Also what the vehicle is used for. For example, is it for daily use or occasional use. Then added to this will there be other drivers using the vehicle.

No Changes At First Renewal


At the end of the first year of the policy, it will be up for renewal. There may be no changes that are significant from when the insurance was first bought. In these cases it is not likely the insurance will go down. If there have been negative changes, it may go up. Other factors that can come into play are changes in regulations. Also, every insurance company is unique in many ways. They may voluntarily lower their rates. Then again they may increase their rates. It could be based on the losses their company experienced during a particular year.

What Can I Do To Bring My Vehicle Insurance Costs Down in the First Year?

One thing that drivers can do to affect their insurance rates is to be insurance savvy. Knowing what causes the rates to go up is one factor. Then knowing what one can do to help reduce the rates is another.

The insurance companies are going to want a good amount of history before relying on it for the driver. So, new drivers are going to have to build a few years of good driving history before it is going to count. However, it is something that should be worked towards.

If one is in the market for a new car at the end of the first year at this can help reduce rates. Knowing which cars are cheaper to ensure may help with the car buying decision.

Being aware of the changes. If one knows how their demographics are affecting their insurance, it can help. This way if there are any changes the insurance company can be made aware of this. If any of these changes are positive they can help to reduce the rates.

Will Shopping for Vehicle Insurance Make a Difference?


Often first-time insurance buyers don’t put a lot of effort into insurance shopping. Quite often many will rely on the insurance companies that their parents have used for many years. It does not mean that they are getting the best rate possible. It is worth getting quotes even after the first year. Every Insurance company has something unique to offer.

About the Author: Ashley Miller

Ashley is an insurance content professional and very knowledgeable on all related subjects. Ashley has over 12 years of insurance content writing experience working with various insurance companies throughout her career.