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Hybrid Car Insurance Discounts
Many moons ago my wife wanted a new car, so we test drove a Prius. Of course the engine was quiet, but had a lot of road noise, no power, and the seats sucked. Since then, I understand they've come a long way. Toyota was the 1st to mass produce hybrids, but now every major major car maker (Ford, GM, Mazda, Lexus, Honda and Renault) are producing them like wall street protestors.
Hybrid sales were just 9,500 in 2000 in the US. In 2012, 780,000 are expected to sell. Many insurance carriers give you discounts for owning a hybrid car. Why? They're becoming more popular, don't typically go fast, and because of the type of the people that buy them.
Slowing your roll
In the past, nothing said "lack of performance" quite like a hybrid. In fact during my 10 minute test drive, I hit the gas and very little happened. Of course, they are quieter, so there is no revving of the engine like in a gas model. But this 0-60 in 10 minute performance has a side benefit. Less damage in a crash. Speed is the #1 issue when it comes to car accidents. Lack of speed = more time to react and brake.
In fact, some Hybrid owners are obsessed with gas mileage, and a big part of saving is reducing their speed.
Although it's not financially measureable, it's been estimated that if most cars sold were hybirds, we could cut vehicle emissions by 50%. Makes sense to me. But there is a counter argument, that Electric energy is the dirtiest energy around, made mostly from coal fired power plants. Coal based power proceds sulfur, carbon monoxide and other deadly toxins by the million of tons every year into the atmosphere. That would only apply to newer plug in cars, currently most hybrid cars recharge their batteries via braking or the engine.
Middle aged (risk) spread
Hybrid owners tend to be very frugal. The demographic of a Hybrid owner is very favorable to insurance carriers. They are usually 40-60. Not to young (hot) not to old (cold), but just right. And the entire point of insurance is so that you pay the insurance carrier and have no accidents, which means no claims. Hybrid owners also tend to be financially secure Which means a job and a house. In states (except California, Massachusetts, Hawaii and Maryland), carriers can use credit scoring, Hybrid owners should do very well.
Fail the smell test?
Your Hybrid discount may be offset by other areas of your risk profile, that may stink to the insurer. Insurance companies do not like to pay money out in claims. Bad driving records (tickets, accidents, or multiple claims) are indications that you might in the future cost them money. If you are a new / inexperienced driver, your pay higher rates. And most carriers give you a loyalty discount (depending on your state) if you stay with the same car insurance company for 3-5 years.
California Prop 103 - safe driver discounts
In California, Prop 103 mandates a 20% discount off your car insurance policy if you've been with your carrier for 3 years or more. This is also know as the safe driver discount. If you leave your current carrier to get a 10% discount for Hybrid coverage (assuming your current carrier does not offer a discount for Hybrid cars), you would pay 10% more. IF all things were equal.
Safety?
You read right, a new study by the IIHS (Insurance Institute for Highway Safety) painted Hybrids as 25% safer (whatever that means) than their gasoline counterparts. Apparently they are out 10% heavier than their standard gasoline brothers, thanks to the large battery coupled with their gasoline engine.
A lighter car is pushed back in a head-on accident, causing extra damage to the passengers. But, hybrids be very quiet in electric-only mode, so pedestrians, don’t hear them coming.
If your carrier does not offer a hybrid discount but has great rates, stay with them! With one exemption, if you learn they fight claims. You could still cheapen the policy by paying the policy annually or semi annually. Some insurers offer to waive monthly service charges if you pay via electronic funds transfer (EFT). You can also clean up your credit and driving record.
Hybrids save you money gas. But that doesn't mean they're cheap. Even with the insurance discount, hybrids themselves cost more than their standard counterparts, and sell near sticker because of high demand. This is often referred to as the "Hybrid Penalty." Choose wisely. If you are tracking the total cost of owning a hybrid (purchase, maintenance, gas & insurance), the higher sticker has to count.
Vehicles purchased after December 31, 2010 are not eligible for this credit. They were sweet while they lasted, the federal tax break established for 2006 came in the form of tax credits, ranging from $3,150 to $250.
Carriers offering hybrid discounts
A few insurers offer Hybrid car discounts. Farmers was first car insurance company to offer a 10% hybrid vehicle discount starting in California, 2005. Geico offers a 5% discount on certain coverages. Travelers insurance offers a 10% discount on your hybrid auto in 44 states. The 10% discount applies to coverages not including uninsured motorist and personal injury protection (PIP). Many others offer hybrid discounts.
Hybrid discounts do not apply to all parts of your car insurance policy, depending on the carrier. With Travelers insurance for example, the discount for cars does not apply to uninsured motorists coverage and personal injury protection (PIP). Still, some insurers offer the hybrid discount, covering the liability portions (the majority) of the policy.
Be sure to ask if your car qualifies for a hybrid discount. The agent or carrier may put your car in the wrong category. Many cars not have hybrid counterparts, so the agent may not ask. Use fancy, high tech phrases like LEV (Low Emissions Vehicle) or ULEV (Ultra Low Emissions Vehicle).
When buying a hybrid car, you don't have to ask yourself "Do I feel lucky?" if you do your research. Find out if your current carrier offers the hybrid discount. If not, it might make sense to get quotes from a few companies in the beige box at the top. Plus you'll help pay for baby Juju's education. She could be president one day!
Written by Craig J. Casey
Financial Writer helping people with their insurance problems on the net since 1998.
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