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rob carrick

The auto industry should join forces with the housing sector to investigate what happens when young people can no longer afford what they have to sell.

For different reasons, both of these pillars of our economy are looking at serious affordability problems. Demand for houses is at risk because prices have surged dramatically at a time when young adults are struggling to be financially independent of their parents. Car prices have been rising less than the inflation rate in recent years, but the actual cost of ownership for young people has reached levels that don't seem to make sense.

It's not the cost of gas in play here, or maintenance bills. It's car insurance. Depending on where you live, what you drive and which insurer you use as a young adult, insurance ranges from exorbitant to utterly unaffordable.

Let's use the example of a 22-year-old male in Calgary buying a 2009 Toyota Corolla. According to the car insurance quotes offered on the new website, annual costs range from $2,758 to $4,525. A woman of the same age would pay $2,494 to $3,560.

Switch to Toronto and the costs range from $3,751 to $7,280 for a male and $3,275 to $5,198 for a female. What, you thought young women paid much lower premiums? "I've heard they're catching up," said Pete Karageorgos, director of consumer and industry relations at the Ontario division of the Insurance Bureau of Canada (IBC).

What they're catching up to is pricing where young adults could conceivably pay as much in car insurance as they do in income tax. What's next? Car Insurance Freedom Day?

Mr. Karageorgos had some figures at the ready to explain why young adults pay such high premiums. Drivers aged 20 to 24 accounted for 8.3 per cent of licensed drivers in Ontario as of 2011, 11.5 per cent of injuries related to car accidents and 16 per cent of fatalities. "Insurers try and match the price to the risk," he said. "Given that young drivers have a disproportionate number of crashes and injuries for their relative size of population, they're charged more."

This pricing is logical, but it raises questions about future car ownership trends. Canadians have been buying new cars and trucks at record levels, so the auto industry is in great shape for now. But as it looks forward, auto makers have to be wondering how many cars they will sell to young adults with limited means to buy vehicles and a preference for an urban lifestyle in which cars aren't necessities. High car insurance premiums just add to the argument against car ownership.

Young adults who do choose to own a car have a few ways to hammer down their premiums. The smart move is to buy used and stay away from car brands and models that insurers have pegged as being especially likely to be stolen. A Honda Civic model and several types of pickup trucks and SUVs are on the IBC's latest list of most stolen vehicles.

Here are a few other cost-saving opportunities for young adult drivers from Daniel Shain, director of product at VerticalScope Inc., parent company of

  • The driver training discount: Completing an approved driving training course is the most basic way to cut your premium.
  • The good student discount: Save money if you maintain high standards in high school or university (one insurer requires an average B or higher, or a grade point average of 3.0 or higher). If you’re keeping good grades it’s assumed you’re similarly conscientious about obeying the rules of the road.
  • The multivehicle discount: Young adults who live at home should see whether they can bundle their vehicle with their parents’ cars to lower the overall household premium.
  • The good driving discount: A clean driving record over three years or more may qualify you for lower premiums.

The best car insurance bargain for young adults is to be an occasional driver on a parent's vehicle, Mr. Shain said. The cost for this coverage should be less than $1,000 per year, and there's a side benefit that will help in the future. When young adults buy a car, they can save on insurance premiums if they have a history of being insured. Being an occasional driver on a parent's car starts the process of building this history.

Finally, comparing rates at various companies is crucial for young drivers. "Rates vary quite a lot," Mr. Shain said. "We're talking thousands of dollars. Some insurers like to insure young folks, and others don't."

Globe app users click here for a table of the car insurance scenarios mentioned above.