Over the past years, car insurance has changed significantly. Since the Toyota Prius debuted to the Japanese market in 1997, worldwide hybrid sales have gained momentum each 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. Another percentage of people however were attracted to the environmental benefits of driving a hybrid vehicle. Others were simply interested in saving money through lowered fuel usage.

Initially, Car insurance rates were also lower for hybrid car drivers than for gas powered cars. Among the first to give discounts for owning a hybrid car was Farmers Insurance and Travelers Insurance. These companies believed hybrid owners were less risky than the average car driver. We will discuss the logic behind why hybrid cars are less risky for insurance companies. 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 your Insurance Firm Views Green Vehicles

For years, car insurance companies have regarded hybrid owners as less likely to be involved in accidents, and thus less likely to file claims. These drivers were believed to make better decisions behind the wheel. Because they presented a lower risk of insurance loss to the insurer, these policyholders were often given discounts on their rates.

It’s worth mentioning that some insurance companies felt differently. Farmers and Travelers insurance offered discounts, but many other firms refused to give any discounts for hybrids. Hybrid drivers were actually asked to pay higher premiums sometimes. 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. Hopefully, this illustrates clearly that different firms interpret a driver’s risk level differently.

Another important factor is that the profile of a typical hybrid owner has evolved over the years. This information hints at how the insurance prices will fluctuate in the future.

The Other Side Of The Story

In the fall of 2010, an auto insurance trends report was released by Mitchell International. Of particular note were their comments regarding hybrid vehicles and their owners. This report found out that hybrid cars had on average almost 7% higher costs than regular vehicles.

However, when the report was released, it revealed that the profile of the drivers was typical to most hybrid owners. When the vehicles debuted, they were purchased by early adopters and environmentally-conscious consumers. On average, they made better choices about their driving habits. Today, the profile has shifted to reflect a growing segment of the market that is motivated primarily by lower fuel costs. Also, a lot of these new hybrid owners tend to have long commutes to work. Due to more driving, it means there’s more likelihood of an accident happening.

Together, these two factors – higher claims cost and an evolving owner profile – are likely to cause an increase in premiums for many hybrid owners. There is an additional facet to this story, however, that is just beginning to surface.

An Uncertain Future Highlights The Value Of Price-Shopping

A new round of electric cars is starting to appear recently. 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. They are likely to be purchased by early adopters and drivers who make better decisions on the road. 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. A few insurance firms will be offering discounts, while others will be charging a premium. It pays to price-shop. Through quote comparison shopping, you can make sure you get the lowest insurance rate.

It’s important to comparison shop when searching for an insurance quote. The lowest automobile insurance quote is easy to get on Kanetix.