Hybrid cars offer excellent gasoline mileage and a reduction in carbon emissions. When the vehicle is driven less than 45 miles per hour, the electric motor is powering the vehicle. The gasoline engine automatically takes over and higher speeds where the engine is most efficient. This powerful combination of technology and tradition provides an innovative method of transportation for the consumer.
At the same time a hybrid vehicle presents a challenge to the skittish auto insurance industry. Before buying a hybrid vehicle, consider each of the following:
Insurance Industry Position
Since the cost of repair and replacement falls on the insurance companies and hybrid cars are usually more expensive to purchase and more expensive to repair than their gas guzzling cousins, most have been hesitant to embrace hybrid cars. Two insurance companies, Farmers Insurance and Travelers Insurance, have offered a 10 percent discount on their annual premium since hybrid cars were introduced. After more actual accident data is gathered, more insurers will likely embrace hybrids.
Broader Market Base – The two insurance companies that have embraced hybrids, view the drivers of hybrids as new customers to win from the marketplace. While each company embraced this innovative vehicle, both companies did research prior to making their move into the market.
Cost of Repairs – Hybrid vehicles cost more to repair after an accident. Unique systems require special attention and most of the parts are available only from central locations since the hybrids are not very numerous. One question that remains is the durability of a hybrid vehicle in comparison to the traditional models.
Hybrid Internal Systems – Damage to the battery bank inside a hybrid car presents the greatest unknown to the insurance companies. Rear collisions could damage the car beyond repair which drives up the collision insurance rates. Accident information does not exist to provide some measure of actual risk that would replace this unknown. Some of the concern is over hazardous material clean-up costs if the batteries leak.
Previous Records – All car insurance rates are calculated based on previous loss statistics. New vehicles present unknowns to the insurance industry, which drives insurance rates up until actual information is acquired.
Drivers of Hybrids
When Farmers Insurance and Travelers Insurance embraced hybrid car drivers, both companies noticed that the drivers applying for insurance after the purchase fell into the preferred classes. The driver profile has followed a pattern that can be described by these attributes:
1 – Middle Age – Hybrid owners are usually married and between the ages of 41 and 60. Statistics prove the low occurrence of accidents for this class of drivers. Owning a home conveys reliability to the insurers, and the majority of hybrid owners also own a home.
2 – Driving Record – Hybrid drivers do not have moving violations on their driving records. Most hybrid owners have driven for many years without any type of accident or violation.
3 – Defensive Habits – Years of safe driving comes from mastering the best defensive driving habits that keep hybrid drivers from having accidents. Respecting speed limits and traffic laws comes naturally to these drivers.
4 – Low-Risk Habits – Hybrid drivers have stated their avoidance of distracted driving habits including cell phone use and any sort of multi-tasking. These older drivers have embraced safe driving habits that prevent accident-related loss to the vehicle.
5 – Preferred Class – Most large insurance companies have grouped low-risk drivers into classes where their low claim rates are rewarded by lower premiums. Hybrid owners fall into these preferred driver profiles and sustain fewer claims.
Insurance Risk Scores for Hybrids
Auto insurance rates are based on indices that are derived from actual accident statistics and repair records. Hybrid cars are rated very closely to the traditional cars of the same model although hybrid car insurance rates are typically higher than a regular car’s rates. To figure the cost of insuring the vehicle, a risk score is assigned based on these three factors:
1 – Collision Damage Factor – When an actual crash occurs, the amount of damage sustained is rated. The unknown factor with hybrid cars is the cost of repairing the unique systems, including the electrical system that is dependent on multiple batteries. As accident statistics are gathered, repair rates will be used to refine this factor within the risk score.
2 – Theft Risk Factor – Hybrid cars are not high on the theft rankings since they are not among the cars targeted for used parts. Only moderate impact on the insurance rate is realized from this factor.
3 – Liability Factor – As liability statistics are gathered from actual situations, this factor will be refined. Some insurance companies require additional liability coverage to compensate for the possibility of fires caused by ruptured batteries in the hybrid car during a collision. This single factor can impact the annual insurance premium the liability score is half of the overall risk score.
Choosing a Hybrid Car Insurance Policy
Insurance rates can affect the cost of owning a hybrid car for the driver with borderline risky driving habits. Comparison shopping will reveal which insurance companies are embracing the hybrid cars through affordable rates. The switch from a traditional automobile to a hybrid should be accompanied by research into the actual information derived from repair statistics. Purchase a hybrid make and model that has been around for more than two years to have confidence in the data that exists.
About the author: Laura is an insurance writer who contributes to an insurance rates website and a website with loads of car insurance information. When she is not researching car insurance savings tips she can probably be found spending time with her kids.