Green cars and insurance: 6 essential things to know

Aaron Crowe

Green cars and insurance

Buying a green car can leave you with all kinds of good feelings. Your electric vehicle won't pollute the air, you won't have to buy gas again, and you'll never have to pay for an oil change.

Before driving off with a green vehicle — which comes all-electric or as gas-electric hybrid — it's worth checking how much auto insurance will cost for your new ride. It will likely cost more than a new gas-only car. A 2008 study by the Insurance Institute for Highway Safety (IIHS) found that hybrid vehicles generally cost more to insure than gas cars.

See also: EV angst: 5 ways to overcome range anxiety

Here are six factors that affect auto insurance on green cars.

1. Green cars are more expensive to insure

It's simple math that auto insurance for green cars is more expensive than for gasoline-fueled cars. Green cars cost more than others, so the higher sticker price will equate to a higher insurance premium. The true replacement cost of your car will be the manufacturer's suggested retail price (MSRP).

Not only is the initial purchase price usually higher, but some parts of electric cars are more costly to replace. These include batteries, electric drive trains and motors. Your green car doesn't have as many components and fuel systems as a gasoline car does, but what it does have could be more expensive to replace if damaged in an accident.

See also: Turn your classic car into a green machine

Collision coverage that pays for damage to your car caused by an accident is an optional part of auto insurance. If you're financing your car, your lender may require the coverage. If you don't have collision coverage on your green car, you'd have to pay out of pocket for any repairs if you caused an accident.

And you can't just take an electric car into any repair shop for work. The complex technology can require a trained mechanic who knows how to work on electric cars, decreasing the availability of repair shops that can work on it.

2. Driving patterns may affect cost

If you're buying a green car to save money on gas, you may be driving the car more in commuter traffic, which can increase the chance of an accident. Your insurance rates may already be high if you drive a lot of miles in commute traffic, but higher repair and replacement costs for green cars can drive up that rate.

3. You're more likely to hit pedestrians

Green cars are often quiet. So quiet, in fact, that they hit bicyclists and pedestrians who don't notice them coming as quickly as they would a gasoline car.

A study by the National Highway Traffic Safety Administration found that hybrid electric vehicles hit people more often than gasoline-only cars.

4. More damage to small cars

Green cars are often small, and small cars have more extensive damage in accidents and are more expensive to repair. While some green cars perform better than others in crash tests — the Chevrolet Volt does better in IIHS tests than the Nissan Leaf, for example — small cars usually are damaged more in accidents than larger vehicles.

5. Discounts are available

Some auto insurance companies offer discounts for hybrid, electric and other green cars. Travelers offers up to a 10 percent discount for owning or leasing such cars. Farmers Insurance also offers discounts for alternative-fuel vehicles.

One reason insurers offer the green-car discounts is that electric-vehicle owners are seen as more responsible and careful drivers, according to a USA Today story. Green-car drivers may be less hurried while driving, in part so they can get better mileage.

6. Other insurance may be needed

Owning a green car can affect more than your auto insurance. If you install a charging station in your garage, you may need to increase your homeowners insurance for potential liability and loss claims.

See also: Zapped! 3 efficient alternatives to EVs

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