Figure Hybrid Insurance Discounts into Overall Cost of Ownership

Statistics compiled earlier in 2009 suggest that 62% of consumers contemplating a car purchase either consider or are committed to buying some kind of hybrid or alternative fuel vehicle. Confusion exists, however, on the question of the expenses involved in insuring a hybrid vehicle. In calculating the actual cost of choosing a hybrid, several factors come into play.

Insurance risk profiles have now been updated to recognize the fact that hybrid drivers are more environmentally conscious and tend to drive less. Therefore, the assumption is that they are safer drivers. On the other hand, there is the wisdom that hybrids require specialized parts and are more difficult and expensive to repair, thus making for more costly insurance settlements. There is truth to both perceptions, but regardless, Farmers Insurance Group of Companies took the lead in October 2005 when they began offering 5% discounts to hybrid drivers in California. Now, discounts of roughly 10% for hybrids are more or less industry standard, although consumers still may have to go after those savings proactively.

In negotiating coverage for a hybrid, all the conventional automotive insurance discounts can still be used, like those available for anti-theft devices or for an exceptionally clean driving record. But in considering the real cost of ownership, drivers should also consider available tax credits.

Between February 17, 2009 and January 1, 2010 new car buyers can deduct their state and local sales and excise taxes up to a $49,500 limit. The value of this deduction will, of course, vary from state to state, but buyers will still want to avail themselves of the deduction while it is available. Additionally, the “cash for clunkers” Car Allowance Rebate System discounts, ranging from $3,500 to $4,500 will be available through roughly November 1. Since hybrids are sure to meet the program’s mileage improvement requirements, this is another major potential savings. Finally, there is an actual Hybrid Vehicle Credit that can take as much as $3,000 off federal tax returns, and a $4,000 federal credit for plug-in hybrids.

Additionally, hybrid drivers are currently being rewarded by some hotel chains that offer lower room rates to customers who drive or rent a hybrid and in some parts of the country, hybrid drivers get free or discounted parking in city and county lots. So, given the current climate of dealer discounts, federal deductions and discounts available, and popular rewards for hybrid drivers, the accrued savings may take so much of the sting out of the initial purchase, that insurance coverage automatically becomes more affordable.

Drivers who play their cards right and go after all the traditional automotive insurance discounts in addition to the roughly standard 10% hybrid discount should find themselves well-placed for low premiums. The important points are to be prepared to negotiate, to comparison shop, and to figure insurance rates into the overall cost of driving the vehicle. In the case of hybrids, other savings and discounts will likely outweigh insurance costs in the first year to two years of driving.

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