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4 ways to go green and cut auto insurance costs

Chris Kissell

Saving the Earth is great, but pocketing a few extra dollars in the process is even better.

As Americans celebrate another Earth Day, many drivers are celebrating the fact that “going green” has resulted in a savings on their auto insurance premiums.

Here are four ways you can trim your car insurance costs simply by making eco-friendly choices.

1. Buy a hybrid, electric, or any car that uses alternative fuel

The gas-guzzling behemoths of yesteryear are becoming dinosaurs in an era of global warming. Today, the trendy move is to “go green” and buy a hybrid or electric car.

Such cars are not necessarily cheaper to insure than traditional gas-powered vehicles, says Lori Conarton, spokeswoman for the Insurance Institute of Michigan.

“If you are going from a less expensive, older car to a new hybrid or electric car, the cost to insure it will likely be more than you were previously paying,” she says. This is because it costs more for an insurer to replace a new car than an old one.

However, some car insurance companies are offering discounts to drivers of hybrids and electrics, as well as cars that use alternative fuels such as natural gas, methane or propane. Farmers Insurance was the first to offer such a discount, says Farmers spokesman Mark Toohey.

“Our research shows that drivers of these vehicles have lower loss costs than that of the average driver,” Toohey says.

He adds that the amount of the discount varies by state, but can be as high as 10 percent.

Travelers also offers a discount to hybrid drivers, up to ten percent.

It’s important to read the fine print in these offers so you know exactly what you are getting. For example, the Travelers discount does not apply to the uninsured motorists or personal injury protection portions of your coverage.

2. Try usage-based car insurance 

Scientists say greenhouse gases are a leading cause of global warming. The fewer miles you drive, the less carbon dioxide you belch into the air.

In fact, every gallon of gasoline you save prevents 20 pounds of carbon dioxide from escaping into the atmosphere, according to the U.S. Department of Energy.

A growing number of car insurance companies now offer significant discounts to drivers who log fewer miles than the average motorist.

These usage-based auto insurance programs – which include State Farm’s In-Drive, Allstate’s Drivewise, Progressive’s Snapshot and Travelers’ IntelliDrive – typically require you to install a small electronic device that monitors your driving habits and reports the results to your insurer.

Your discount will depend upon several factors, including how many miles you log, the time of day you drive and how often you brake hard. Savings vary by insurer and state, but can be as much as 50 percent.

Other insurers may offer discounts if you plan to keep your car in the garage for a while. For example, Erie Insurance may shave up to 30 percent off your premium if your car is unused for at least 90 consecutive days, says Erie spokeswoman Leah Knapp. 

The Erie policy allows customers to get the price break for the months they do not use their car without having to drop coverage.

Also, some insurers – such as MetroMile – charge policyholders for each mile they drive. Policyholders pay a relatively modest base rate each month, and then pay for each mile they actually drive. Base rates and per-mileage rates vary, depending on factors such as your age, vehicle model and driving history.  

3. Go paperless on billing and documents

Digital technology promised to create a “paperless society.” But anyone who works in an office knows that dream never became reality.

Each year, Americans use about 71 million tons of paper and paperboard, according to the Environmental Protection Agency.

Car insurance companies now offer various discounts for going paperless. Progressive will give you a one-time $50 price break on your auto insurance bill if you sign documents online. In addition, you will get an ongoing discount of up to 5 percent if you agree to receive your bills and documents digitally instead of through the U.S. mail.

Other insurance companies offer discounts if you make electronic payments. For example, Allstate offers a 5 percent discount on some policies for people who have their insurance payment automatically withdrawn from their checking or savings account.

“In many states, we also offer up to 10 percent as a discount for receiving your policy docs electronically,” says Allstate Insurance spokesman Justin Herndon, who notes that the price break remains in place as long as the policyholder continues to receive the documents this way.

Other companies that offer green discounts for going paperless are Auto-Owners Insurance, Nationwide and 21st Century.

4. Switch to a motorcycle or scooter

If you are born to be wild – or you are just naturally frugal – you can save cash by dumping your car in favor of a motorcycle or scooter.

Such rides typically are cheaper to purchase and insure than their four-wheeled counterparts, although the premium you pay will depend on the model you buy.

Motorcycles and scooters also are a good “green” choice, as they consume less gas than cars, making them easier on the environment.

In 2011, motorcycle drivers averaged 43.5 mpg while traveling U.S. roads, according to the U.S. Department of Transportation. In the same period, car drivers averaged 23.1 mpg.

Other factors also may contribute to the lower cost of owning a motorcycle, depending on the state. For example, in Michigan, all car drivers must purchase personal injury protection – but the requirement does not apply to motorcyclists, Conarton says.





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