Discounts for Eco-Friendly Vehicles

What do Tom Hanks, Meryl Streep, Cameron Diaz, Leonardo DiCaprio, Tim Robbins, and Sting have in common? Aside from enjoying prodigious wealth and fame, all of the aforementioned entertainers reportedly drive hybrid vehicles. These celebrities probably purchased hybrids to do their part to halt global climate change rather than save a few dollars at the gas pump, but the point is this: the reasons to drive a hybrid seem to grow more numerous by the day. Hybrid vehicles are chic, gas-saving, carbon-footprint-reducing machines, but we can now add one more item to their list of benefits: car insurance discounts. Some auto insurers have recently begun offering discounts to drivers of hybrid vehicles, a move that experts regard as a harbinger of an imminent nationwide trend. In this post, we’ll discuss the possibility of insurance discounts for eco-friendly vehicles and explain the reasoning behind the discounted premiums.

The Trendsetter: Travelers Insurance

Travelers Insurance was the first company to offer auto insurance discounts to the drivers of eco-friendly vehicles. Since February of 2006, Travelers has offered a 10% discount on car insurance to drivers of hybrid vehicles. The groundbreaking program was the first of its kind, and other insurers are expected to follow suit. The Travelers hybrid vehicle insurance discount has greatly expanded since 2006 and is now available in 44 states.

Why the Discount?

The research Travelers Insurance conducted on hybrid vehicle drivers revealed that these drivers tend to fall into the “preferred” insurance category, and this was the impetus for the discount. Preferred drivers represent less of a claims risk to insurers, and they are consequently rewarded with lower premiums. When you examine the profile of hybrid drivers, it becomes clearer why insurers favor these drivers:

• Hybrid drivers are usually between the ages of 41-60
• They are typically married
• They have higher levels of income (71% earn more than $100,000)
• Hybrid drivers have a higher average level of education than any other group of drivers

Hybrid Discounts: Good Business

Of course, virtually everything businesses do, including insurers, is at least partially motivated by a marketing gimmick of some kind, and premium discounts for hybrids are no exception. The hybrid market is booming, with sales up 30% at the beginning of 2008, and insurers want to respond to the changing market. Apparently, it pays off, since the introduction of their hybrid vehicle discount in 2006, Travelers has seen its hybrid new car business grow by a whopping 200%.