The Cost of Going Green: Insurance Rates for Eco-Friendly Vehicles
As the automotive industry moves toward more environmentally friendly options, many are making the switch to hybrid and electric vehicles (EVs). While the idea of driving a green car is appealing, potential buyers often consider the costs associated with such vehicles, and car insurance is a key factor. However, depending on the vehicle and the insurance plan, consumers might find that green vehicles are more expensive to insure than conventional gas-powered vehicles.
“It’s not easy being green,” as the song goes, and changing from a gas-powered car does come with some challenges. For example, a new report shows that the average repair cost for an EV is nearly 3% higher than that for a small internal combustion engine (ICE) car. Replacement parts for EVs are also more expensive, around 2.7% pricier than those for small ICE cars, due to more complex electrical systems. Repair facilities may also need to update their staff training and equipment to meet the needs of more advanced EVs. Interestingly, the same CCC report also revealed that EV owners were actually 3% more satisfied with their repairs compared to the average ICE car owner. The initial investment in a hybrid or electric vehicle can offset fuel and emissions expenses, and drivers may also be eligible for a federal tax credit.
Least Expensive Green Cars to Insure
If you’re in the market for a green car, understanding insurance costs is essential. The following vehicles are among the least expensive to insure, according to available data.
Mid-Range Insurance Costs
The following vehicles are in the mid-range when it comes to annual insurance expenses.
The Most Expensive Green Cars to Insure
Here are some of the most expensive green cars to insure. The Porsche Taycan holds the top spot, with the highest average annual premium.
Comparing Green and Gas Vehicle Insurance Rates
When it comes to car insurance rates, green vehicles are often more expensive to insure than their gas-powered alternatives. Based on an analysis of the least expensive green vehicles, gas-powered models generally were more affordable to insure than their hybrid counterparts. The tables below gives some examples:
Car Insurance Rates: Green vs. Gas Vehicles
Source: Quadrant Information Services
Understanding Green Vehicles
A “green car” is a vehicle that uses alternative fuels like electricity, hydrogen, or biofuels. Here are the most commonly used green vehicles.
- Hybrid electric vehicles. Combining an electric motor with a gasoline engine, these vehicles offer improved fuel efficiency. Examples include the Ford Fusion, Honda Accord, Kia Niro, and Toyota Prius.
- Plug-in hybrid electric vehicles (PHEVs). Able to be charged from a household outlet, PHEVs use both gasoline and electricity. These cars often use electric power first before switching to standard hybrid functionality. PHEV examples include the Honda Clarity PHEV, Lincoln Aviator PHEV, and Mitsubishi Outlander PHEV.
- All-electric vehicles. Relying solely on electricity, these cars must be charged regularly and have a limited driving range. Examples include the Chevy Bolt, Nissan Leaf, and Tesla Model 3.
The benefits include better fuel economy and lower emissions. Furthermore, purchasing an all-electric or plug-in hybrid car might allow you to qualify for a federal tax credit.
Why Green Vehicles Can Be More Expensive to Insure
Insurance companies evaluate claims history when setting prices. Green vehicles often present higher costs in repairing and replacing key components. For example, battery replacement can be quite expensive. More expensive parts and higher claims costs can result in those higher insurance rates. Also, the technology is new enough that fewer repair shops are equipped to service them.
Factors Affecting Car Insurance Costs
Insurance costs depend on a range of factors that drivers should consider. These can include:
- Your driving record. Drivers who are careful and avoid accidents and violations tend to get the best rates.
- Driving experience. Young and inexperienced drivers usually pay more.
- Claims history. Drivers who have a record of claims can expect to pay more.
- The type of coverage you choose. The levels of coverage you select—such as collision or comprehensive—affect rates.
- Where you live. Higher rates of accidents and vehicle theft in an area often translate to increased costs.
- Your insurance history. A gap in coverage will likely increase costs.
- Your credit. In certain states, credit-based insurance scores can impact rates.
How to Save on Car Insurance Rates
If you are buying insurance for a green vehicle, there are ways to lower your costs.
- Shop around. Because each insurance company has its own pricing for green vehicles, it’s a good idea to compare quotes from different companies.
- Ask for discounts. Many companies offer discounts for safe drivers, students, vehicle safety and anti-theft devices. You might also get a discount for going paperless.
- Take advantage of telematics. Consider usage-based insurance to save money.
- Try a pay-per-mile plan. If you do not drive often, pay-per-mile auto insurance might be a good choice.
