Drive a Hybrid and Save on Your Insurance

Better gas mileage isn’t the only way a hybrid vehicle can save you money. Recently, more and more auto insurance companies have begun to offer substantial discounts to the drivers of hybrids. Usually, this discount is around 10%. One of the first companies to offer this discount, Travelers Auto Insurance, cites the lower risk of hybrid drivers as the reason behind the lower premiums. Statistically, drivers of hybrids tend to be involved in fewer accidents, which justifies the lower rates. In this post, we’ll discuss hybrids and auto insurance rates in further detail.

Hybrids 101

A hybrid car has a built-in rechargeable energy storage system (RESS) and a fueled propulsion source of power. Usually, a hybrid vehicle is a petroleum-electric hybrid that uses gas to power internal-combustion engines, and batteries to power the electric motors. Some hybrid cars recharge their batteries by using kinetic energy released during regenerative braking. Other hybrid vehicles are powered by hydrogen gas. Since their introduction in 1999, hybrids have at least doubled in popularity every year. With skyrocketing gas prices, it is estimated that hybrids will make up at least 15% of the vehicles on the road in the next ten years. Currently, hybrids account for about 1% of all vehicles. More and more auto manufacturers are rolling out hybrid models, including Toyota, Honda, Lexus, Ford, GM, and Mazda.

Low-Risk Drivers

As mentioned before, the drivers of hybrid vehicles can get up to a 10% discount on their auto insurance policies. This adds up to savings of hundreds of dollars per year for most drivers. To explain the discount, you have to analyze the way insurers view the drivers of hybrid cars. Hybrid drivers tend to fall into the “preferred insured category,” which usually includes mature and responsible drivers. Drivers in this category are less likely to get into accidents, which also means they are less likely to file claims. Thus, these drivers represent less risk for the insurer, hence the significant discount on premiums. Commonly, hybrid drivers are married people between the ages of 41 and 60, with both genders equally represented. This demographic group tends to be one of the most responsible and financially stable.

Hybrid Savings

If there is a hybrid vehicle that is priced similarly to a non-hybrid vehicle you are considering buying, then you might realize considerable savings by going with the hybrid. Here is a summary of the ways a hybrid vehicle can save you money:

• Discounted auto insurance premiums
• One-time income tax credit of up to $2,000
• Better fuel economy

Additional Resources

• Hybrid Cars: Do They Make Sense for You?
• About Hybrid Vehicles