Auto insurance protects car owners and drivers against the financial risk of accidents, theft and vandalism. Most people on the road would call it a necessity. In many states, auto insurance is also required by law.
An insurance company determines coverage rates by grouping people into categories based on the following factors such as:
- Driving record: the less accidents, moving violations and major comprehensive claims in the insured's household, the lower the rate;
- Type of car: the more expensive the car, the more it costs to insure because of the potential cost of repairing or replacing it. Insurers also consider safety features like air bags and anti-lock brakes;
- Age: teenagers represent some of the highest risk customers and are charged accordingly;
- Amount of coverage: better coverage costs more;
- Credit history: Consumers with bad credit pay 20 to 50 percent more in insurance premiums than those with good credit [sources: AutoOwnersInsurance.org, Travelers, Palmer].
Bottom line: Although a hybrid driver can save a small percentage on certain parts of his or her insurance rate, the rate is likely inflated at the outset due to other concerns related to hybrids. Specifically, hybrid cars cost more to repair than similar traditional fuel vehicles, largely because there aren't as many aftermarket repair parts available for these relatively new cars. More expensive than their counterparts, hybrids are also more costly to replace. As a result, collision claims involving a hybrid vehicle are an average $182 more expensive than those involving gas-powered vehicles [source: The IMT Group].
Hybrids are also more likely to collide with pedestrians and bicyclists, at least one report shows, presumably because these cars feature quiet engines that others may not hear approaching [source: National Highway Traffic Safety Administration].
None of the 10 least expensive vehicles to insure are hybrids. In fact, none of these 10 vehicles are even cars; they're trucks and vans [source: Pierce].
Driving a hybrid may be environmentally sound, but when it comes to auto insurance, it probably won't save you any green.