Significant changes have been happening in the car insurance world. From the launch of Toyota’s Prius in Japan during the late 1990s, the sales for worldwide hybrids have been rising year after year. Once the model of combining an electric motor with a traditional gas-powered engine earned consumers’ confidence, sales surged. For some, the impetus to purchase a hybrid – at least, during the first few years – was to earn tax credits. Some people were interested in hybrids in order to be more environmentally friendly. Still others were drawn to the fuel-efficient cars by lower overall fuel consumption.
Another benefit many early hybrid owners enjoyed was a noticeable reduction in their auto insurance rates. Farmers Insurance and Travelers Insurance were the first of a growing number of insurers to extend discounts to policyholders who owned a hybrid. This was more than a mere marketing ploy. These companies believed hybrid owners were less risky than the average car driver. 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
For years, car insurance companies have regarded hybrid owners as less likely to be involved in accidents, and thus less likely to file claims. They were thought to make smarter choices while driving. Because they presented a lower risk of insurance loss to the insurer, these policyholders were often given discounts on their rates.
Although some firms believed this, others did not. 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. Since the new technology came at a higher cost, the insurance premium also had to be increased to cover the expensive new parts of the hybrid engine. 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.
The Other Side Of The Story
Mitchell International released a large report in the second half of 2010. Something worth mentioning about this report was the information about the hybrid cars. This report found out that hybrid cars had on average almost 7% higher costs than regular vehicles.
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. They had made safer choices when it came to driving decisions. Recently however, this profile has grown into a separate market segment that is marketed mostly by the fuel savings. Also, a lot of these new hybrid owners tend to have long commutes to work. Because they drive more miles, they are more vulnerable to accidents.
These factors: higher costs for each individual claim and more accidents results into a premium for hybrid car drivers. There’s one more level to this dilemma however, but it’s just becoming to be more apparent.
An Uncertain Future Highlights The Value Of Price-Shopping
Now, a new generation of electric vehicles is starting to be available. The leader for all-electric cars is the Nissan Leaf, but the Chevrolet Volt is also catching up really quick. This is notable because these vehicles may have the same effect on car insurance rates as hybrids during their initial years. 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 conclusion is that it’s hard to come to a decision whether insurance rates are actually going to be lower for these cars or not. Although some insurance companies will be offering discounts, others might ask for a premium. It’s a good idea to compare more than one provider. Compare quotes between several car insurance companies to ensure you enjoy the lowest rates possible for the coverage you need.
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