Owners of Hybrid Vehicles May Lose Car Insurance Discounts

Hybrid logo on back of carAlong with having to fill up at the pump less often, hybrid-vehicle owners also have historically benefited from discounted auto insurance rates. But a report recently released by automotive industry information provider Mitchell International Inc. shows that claim costs for hybrid vehicles are higher than those of their non-hybrid counterparts and that hybrid owners’ coverage rates may be on the rise as a result.

Mitchell’s vice president of industry relations, Greg Horn, notes that, as hybrid vehicles have gained in popularity, the type of driver using them has changed. The U.S. Department of Energy says hybrid vehicle sales increased 40 percent between 2006 and 2007.

The changing profile of hybrid motorists may cause auto insurance rates to rise. Horn notes that initially hybrid owners were interested in the environmental impact of their vehicle and tended to have conservative driving habits. More recent research, however, shows current hybrid drivers are more likely to receive traffic tickets and to live in urban areas, where crash rates are generally higher.

The report also indicates that the cost of repairing hybrids is generally higher than the cost of similar non-hybrid cars.

“Mitchell’s in-depth, multi-year data show that hybrids have a 6.5 percent or $182 higher average claim severity than their gas-powered counterparts,” said Horn. “From a claims severity and frequency perspective, hybrid vehicles represent a more costly overall risk to insure than their gas only powered cousins.”

The difference in repair costs comes from two sources. First, mechanical labor costs are more expensive for hybrid vehicles, according to Mitchell. Also, the rate of alternative parts for repairs is also lower for hybrid models, meaning that more expensive parts are often used. Horn posits that this may be because hybrid owners tend to go to the dealership for repairs, where alternative parts are used less frequently.

Given the apparently heightened risk that comes with covering a hybrid, cheap insurance for these vehicles may become increasingly hard to find.

About Ben Zitney
Benjamin Zitney has been covering the auto insurance industry for the past 2.5 years. Before coming to Online Auto Insurance News, he produced an extensive company history of the 30-year-old California Joint Powers Insurance Authority and worked at the Cal State Long Beach Daily Forty-Niner as a reporter, copy editor and news editor.

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