Do “Green” Cars Offer Lower Insurance Premiums?
Significant changes have been happening in the car insurance world. Since the Toyota Prius debuted to the Japanese market in 1997, worldwide hybrid sales have gained momentum each year. As soon as the hybrid motor started winning credibility and confidence in the eyes of car drivers, sales have risen dramatically. For some, the impetus to purchase a hybrid – at least, during the first few years – was to earn tax credits. Others were motivated by a desire to be more environmentally conscious. Another percentage of people was interested in the savings attainable through using a hybrid engine.
A lot of the early drivers of hybrid cars also received a lower car insurance rate than the average population. Farmers & Travelers Insurance were the first of insurers to give discounts for owning hybrid cars. The reason for lower rates is that hybrid car owners are thought to be less risky drivers than most people. Below, we’ll explain why buying a hybrid (or all-electric) vehicle may help you save money through lower car insurance premiums. We’ll also describe how the current narrative regarding hybrids is changing, and why the latest chapter in automotive technology presents an interesting twist.
How Green Vehicles Are Seen By The Insurance Companies
As mentioned earlier, for a very long time, many auto insurance firms have looked at car owners as safe drivers and as a result more likely to not be involved in accidents. These drivers were believed to make better decisions behind the wheel. Since they were less risky, the insurance firms gave them lower rates.
It’s worth mentioning that some insurance companies felt differently. Although Travelers Insurance and Farmers Insurance tried to lead the race by giving drivers lower insurance rates, some insurance firms absolutely refused to offer discounts for hybrid cars. Some actually increased them. They claimed a lack of data about the new technology, combined with higher replacement costs for various components, posed greater risk. This highlights the reason consumers should always compare quotes from multiple insurers. There is clearly a visible difference in how insurance companies interpret their customers safety levels and therefore, the rates they offer to them.
Over the last years, the traits of your average hybrid car owner have evolved slightly. This is yet another piece of information that shows how car insurance rates may be affected in the future.
There’s More Than One Side To This Coin
In the third quarter of 2010, Mitchell International, an authority in automotive collision repair in the U.S., released their latest “Industry Trends Report.” Of particular note were their comments regarding hybrid vehicles and their owners. In this report, it was revealed that hybrid cars had an average cost of 7% more so than normal cars.
The driving profile was pretty standard to the stereotypes of the hybrid drivers. When the vehicles debuted, they were purchased by early adopters and environmentally-conscious consumers. On average, they made better choices about their driving habits. Today, the profile has shifted to reflect a growing segment of the market that is motivated primarily by lower fuel costs. Many of these newer owners endure long commutes. Because they drive more miles, they are more vulnerable to accidents.
Together, these two factors – higher claims cost and an evolving owner profile – are likely to cause an increase in premiums for many hybrid owners. There is an additional facet to this story, however, that is just beginning to surface.
An Uncertain Future Highlights The Value Of Price-Shopping
A new round of electric cars is starting to appear recently. One of the top ones right now is the Nissan Leaf, but there are several other competitors already such as the Chevrolet Volt. Just like the hybrid generation, these cars are important to keep in mind because they could have low insurance rates initially. The environmentally conscious will probably be among the first to buy these cars. Therefore, drivers with all-electric vehicles might receive some initial insurance discounts. The takeaway is that nothing is certain with regard to auto insurance rates for “green” car owners. A few insurance firms will be offering discounts, while others will be charging a premium. It pays to price-shop. Be sure to compare more than one quote from car insurance firms to make sure you’re getting the best rate.
Car insurance companies can offer you really good deals if you know how to shop online for them. Get the cheapest automobile insurance quote at Kanetix.
