September 6, 2011

How The Auto Insurance Industry Is Impacted By Eco-Green Vehicles

The auto insurance industry is certainly affected by vehicle manufacturers' innovations, especially if those innovations make cars more or less safe. Safe cars mean a low number of auto insurance claims and lower insurance for drivers. In the past few years, however, the auto insurance industry has put more and more of an emphasis on gas mileage and environmentalism rather than safety. Eco-green vehicles such as hybrids and electrics have certainly had a significant effect on the auto insurance industry, although this effect occurs in a sort of roundabout way.

Eco-green vehicles are not statistically much safer than standard gas guzzlers. Hybrids and electrics usually have the same safety features and safety options as vehicles that use gasoline. Some have advanced computers and sensors that work to prevent accidents, but it's not intrinsic to the design. For all insurance purposes, eco-green vehicles are about as safe as normal vehicles. However, they do tend to be driven much more safely according to the actuarial statistics that car insurance companies use to decide their rates. Eco-friendly vehicles are much less likely to be involved in a serious accident and, because of their advanced electronics and ignition systems, many are harder to steal. Car insurance companies simply pay out fewer claims for ecologically safe vehicles and, for those vehicles' drivers, this means lower rates.

Many car insurance companies offer a special discount to hybrid drivers. Eco-friendly vehicles that are simply good at conserving fuel might not get an official discount, but chances are good that they'll get lower-than-average auto insurance rates. It's difficult to estimate how different rates are for eco-friendly drivers, as car insurance rates vary greatly depending on a driver's record, a vehicle's design and many other factors. Generally, it's safe to say that green cars cost much less to own when insurance discounts and gas costs are considered - however, the MSRPs of these vehicles also tend to be higher than many standard, non-fuel-efficient vehicles.

In the end, it's hard to argue against the idea that eco-friendly vehicles save their drivers money at the pump and money on insurance bills each month. However, discounts and preferential rates from auto insurance providers are most effective when combined with other discounts. Drivers should look at rates before buying a new car in order to find the total cost of ownership for a vehicle and it can also be helpful to ask about insurance discounts and special pricing available to eco-friendly drivers. Going green can provide a lot of savings but, when purchasing car insurance, it pays to do research to know exactly how significant the savings will be.