Dear valued HUB SmartCoverage client: The ongoing COVID-19 crisis is causing extremely high traffic volume and wait times may be longer than usual. We recommend that you register for online self serve to submit your request. Be sure of one thing, we’ll take care of you!
Are you thinking about purchasing a hybrid or electric vehicle? It’s a valid musing these days.
A growing segment of society is becoming conscious about energy conservation, climate change and greenhouse gasses, all of which seem to be impacting people everywhere. Extreme weather goes on to affect the global insurance industry as well.
Going green saves you green (money, that is) because you'll pay for less hydro in your home when you switch to more efficient power or heating sources like solar. You might even choose to renovate your whole house into a power saving machine.
You can save money on gas and repairs when you switch your everyday vehicle from a gas guzzling tank to a lighter alternative.
There are government incentives and rebates that have been put into place across Canada which make electric vehicles more affordable and attractive to speculative buyers (see Incentives section below).
We’re going to talk insurance costs in this article, and weigh the reported costs versus the potential discounts associated with electric or hybrid vehicles.
Buying an electric or hybrid vehicle definitely saves you money on gas, but it might cost you a bit extra on your auto insurance.
NerdWallet —a company that specialises in financial tracking— researched “insurance premiums for gas and electric versions of the same cars and found that the electric cars had higher premiums in all cases.” Huffington Post claims that “these vehicles’ higher values and repair costs are to blame” for the higher insurance rates. There’s a 21% to 23% higher premium for electric cars than gas, on average.
So, if you pay $1,000 for auto insurance per year with a gas car, you’d pay anywhere from $1,180 to $1,320 for the electric version. At the higher end of the scale, you'll pay around $25 more per month to insure your e-vehicle.
An important reason for the higher insurance rate is that electric cars are worth more and therefore command a higher insurance risk. The more a car is worth, the more an insurance company has to pay if it’s totalled or stolen.
Electric and hybrid cars often require less servicing than their gas cousins. But, when something goes wrong or if you get into an accident, the repair costs are higher because you need speciality mechanics to fix things such as damage to batteries or electric control panels. Despite this, analysts say that these costly repairs occur less frequently than they do with gas vehicles.
There are a bunch of insurance-oriented comparison charts on the web if you’d like to see the reported cost differentials between specific electric makes and models.
Rest assured, there are rebates and incentives to offset some of the insurance costs. After all, going green is welcomed by North American governments.
Here’s what the Ontario Ministry of Transportation generally says about the eligibility criteria for electric vehicles under their Electric Vehicle Incentive Program:
They list nearly every vehicle brand, so it is likely that your new battery-operated vehicle will qualify.
In Ontario, “the following incentives are available for eligible electric vehicles with an MSRP (manufacturer’s suggested retail price) less than $150, 000:
Vehicles with an MSRP over $150,000 are not eligible for an incentive.”
Conversely, in the US, there is a $7,500 tax credit at the purchase of an electric car. Let’s hope Canada follows suit this year.
Insurance companies offer 5% to 10% discounts for owners of hybrid or electric vehicles. “Green” discounts are based on the fact that fewer collisions are associated with hybrid or electric vehicles. Providers are comfortable with offering discounts because of environmental, security and statistical standpoints. Going green supports and advances their own green initiatives.
Talk to an insurance broker for information about specific offers for hybrid or electric vehicles, and make sure to shop around for the best quote.
Let’s also keep in mind that you’ll be saving on gas. More and more parking lots are being outfitted with charging stations, so along with the price of parking, you can charge your vehicle for free. How’s that for a 2-for-1?
As you can see, there are a few variables to understand if you're considering the purchase of a green(er) vehicle for your family or business.
The insurance premium will be relatively higher in most cases, but that’s because your car is worth more and is trickier to repair. Plus, since you're saving so much money on gas, the little extra per month on auto insurance pays for itself, in a way. If you're worried about the higher costs of e-repairs, know that insurance companies report fewer accidents involving electric or hybrid vehicles, so that’s another advantage.
More provincial governments are offering incentives and rebates that get you into a green vehicle with less difficulty; it’s expected that this will only improve and increase as we move into the future. And lastly, insurance providers with green programs will offer special discounts on that higher insurance premium with a green car.
There are pros and cons to insuring a hybrid or electric vehicle, but when it comes to lowering your carbon footprint, it’s priceless!