Society

Is it Less Expensive to Insure a Hybrid?

Life is more expensive than it used to be. Let’s look at the facts: the recession is still ongoing, despite the fact that the government keeps telling us things are turning around; it now costs more than $200,000 to raise a child to the age of 18 (that doesn’t even include the cost of college, which, by the way, comes with a lot less scholarship opportunities these days); and of course, the price of gas seems to be going up and up with no end in sight. On this last score, at least, there seems to be some relief. With more companies producing hybrid vehicles (and tax incentives in place for those who buy newer plug-in hybrids this year), the attendant price tags for owning one have come down. And by purchasing a hybrid, your cost at the pump can be greatly reduced (along with your carbon emissions). Sadly, the money you save may go to insurance if you don’t get the right hybrid. Here are a few things you need to consider before you purchase that Honda Civic hybrid.

First, you need to look at the size of the vehicle you’re buying. You might be looking at an economy-sized car like the Civic, the Ford Focus, or the Toyota Prius. Although this makes sense from the standpoint of doing the most for the environment, and it will probably offer the best gas mileage, it may do little to bolster your budget since smaller hybrids often come with the largest insurance premium. But why? As it turns out, many small vehicles are prone to higher rates simply because they are more frequently targeted for theft. Although you may not see this as a valid concern with a relatively inexpensive car like the Civic, your insurance company apparently feels differently. And when you think about it, cars that are less expensive generally lack the additional security of more expensive vehicles (tracking systems and so on). So if you haven’t considered a larger hybrid (such as an SUV), maybe you should. It could add to your savings where insurance is concerned.

The other major consideration is unfortunately something that you can’t do much about. Hybrid vehicles are often more expensive to insure simply because they cost more to repair. Even minor repairs could require additional labor, and some of the parts will definitely cost more to replace should you have an accident. While you really can’t do anything to lower the price of these parts, you can probably save something on your insurance cost by getting a certified pre-owned vehicle instead of newer model (older cars almost always cost less to insure).

The truth is, you stand to save a lot by purchasing a hybrid vehicle. If you go for one of the new plug-in hybrids, you will be eligible for federal tax credits of up to $7,500 (plus an additional $2,000 towards the installation of a charging station in your garage). And you may qualify for state tax credits on top of that (California, for example, is offering up to $5,000 over and above the federal credit). Plus, you’re saving on the cost of gas. If you travel less that about 40 miles in a day, you may never need the fuel-cell portion of your plug-in hybrid. So you can definitely offset the additional costs for insurance until hybrids become more prevalent and the prices come down accordingly.

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