Insurance issues

Insurance and Hybrid Cars

When you buy a new car, there are many factors to consider other than just the sticker price. You might, if you look into more than many people, look at maintenance costs and fuel consumption (certainly something the average hybrid will do).

Interestingly, fewer than 10% of the people purchasing new cars ever consider the cost of insurance.

As a Prius owner, you can expect to have good fuel economy and spend less on gas, but you could also be paying more for your car insurance. Here’s why:

• Size: Small cars in general are more expensive to insure because there’s a higher likelihood of injury if there’s an accident. Minimal crumple zones mean less protection, especially in head-on collisions, and that means a greater risk of the insurance company having to pay out a medical or liability claim.

• Theft: Hybrids are popular these days, with waiting lists in many cities. This means that they’re also prime targets for being stolen, as with anything perceived as being new, different, or desirable. To your insurance company, the greater likelihood of theft means a greater likelihood of a claim, so they charge more to off-set that.

• Repairs: Hybrids like the Prius can’t be fixed at just any mechanic, but must go back to the dealer, at least if anything happens to the drive system. This means greater cost to your insurance company in the event of an accident, which is passed on to you. Even in places where mechanics are trained in working with hybrid vehicles, there are no off-brand parts yet available for repairs to the power system, and OEM parts, while generally covered for hybrids, are more expensive to replace.

The Good News

While all of the factors above do contribute to higher insurance premiums for hybrid owners, the good news is that there are also many discounts and credits that you’re likely to qualify for as well, even if you don’t meet the requirements for a state or federal tax credit. Some examples?

• Credit for good credit – hybrid drivers tend to be credit savvy as well as green.

• Discounts for clean records or significant driving experience – hybrid drivers tend to have at least ten years behind the wheel, and tend not to speed or have other points on their licenses.

• Home-auto discounts – As a hybrid owner there’s a good chance that you’re also a homeowner, and you can save money on insurance by bundling your homeowners and auto insurance policies with one company.

Owning a Prius – or any other hybrid cars – isn’t always about the money. For many people it’s a conscious and deliberate choice to pollute less more than a financial one. Still, being aware of potential expenses you need to plan around is never unwise. Check with your insurance company at renewal time to see if they’re offering you the best deal possible.

Car insurance premiums can add substantially to the annual cost of operating your auto. But how much do you research a vehicle’s potential insurance costs before you sign the paperwork and drive away?