Toyota Prius damaged in front end collision.
Hybrids like this Prius might save gasoline and produce far fewer CO2 emissions, but they can be wrecked like any other car.

Are Electric Cars Really Saving You Money?

Insurance can be more expensive on a hybrid and here are some reasons why.

By Sean Cundall

Hybrid and plug-in cars are attractive at first glance. After all, if you want to reduce your dependency on petroleum products (i.e. gas) for either environmental or political reasons, switching to a hybrid, or even just a small car, is definitely the way to go. If you are thinking of swapping your gas-powered vehicle for an electric or hybrid solely to save money, there are other factors you may want to consider.

One such factor affecting the total cost of an electric car is insurance. While it's true that many drivers receive tax incentives for owning alternative-fuel vehicles, and equally true that insurance companies often offer special discounts for such cars, the insurance for such a vehicle starts out higher than that. How much higher? A recent study covered in the Wall Street Journal says that it is $650 more expensive to insure a Toyota Camry hybrid than the gas-only model.

Why are Hybrids More Expensive?

There are several reasons why hybrids and all-electric cars are more expensive to insure. They include:

Lack of statistics: Because electric and hybrid-electric cars are so new there aren't decades of crash data available. Insurance premiums are based on risk: how likely are such cars to crash? If they do crash what is the most typical damage. Without information, insurers hedge their bets and charge more.

Higher repair costs: Plug-in and hybrid vehicles use non-standard parts, which many repair shops simply do not stock, so if your car is in a crash, not only must parts be ordered, but they cost more than more conventional components. This increases what you pay for your insurance, just as it increases the amount of money insurers must payout for parts. Add to that the fact that special and new technology also requires special and new training for mechanics and auto-body repair folks, and you can see why the numbers climb.

Size matters: Hybrids may sometimes have the same body size as their compact gasoline brethren, but all-electric vehicles tend to be extremely small, and the smaller a car is, the more likely it is to be stolen, or to be declared a total loss in the event of an accident with severe damage. Again, insurance is based on risk, which makes premiums more expensive.

Ways to Save

Despite the increased cost of insurance for hybrids and plug-ins, there are ways to save money on insurance. They include asking for discounts based on age, experience, club and union membership, and brand loyalty, as well as alternative-fuel discounts, or discounts for things like buying insurance online and accepting emailed documents and bills. In addition, you can save significant amounts of money by shopping around for your auto insurance and comparing different programs and policies.

Driving a hybrid or electric car is a wonderfully progressive choice, but you also have the choice not to pay too much for insurance. Choose wisely.

Times Article Viewed: 7588
Published: 24-Feb-2009


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