If you're looking for ways to cut your insurance bill, consider going green. More and more insurance companies -- including Progressive, GEICO, Travelers, Farmers and GMAC -- offer discounts on insurance premiums for those who drive "green" vehicles or participate in pay-as-you-drive programs.
But insurance companies don't provide these discounts as a reward for being eco-conscious. Insurers base their premiums on risk, and many green initiatives result in lower risk factors for insurers, which translate to lower premiums for you. Encouraging people to drive less through lower monthly premiums means fewer cars on the road and less risk for accidents (and insurance payouts).
Many insurance companies also have found that, statistically, those who drive green cars, take advantage of carpools or use alternative energy sources fall into a lower risk category, according to Edmunds.com.
Discounts for green initiatives Some of the discounts available on car insurance for those who are environmentally friendly include:
- Hybrid car discounts. Driving a hybrid vehicle reduces harmful emissions from your vehicle, and some auto insurance companies offer discounts for driving them. While Farmers Insurance Group was the first to offer discounts for driving hybrids, many other insurance companies -- including Travelers, GEICO and Progressive -- will discount premiums as much as 10 percent for driving a hybrid.
- Alternative fuel discounts. If your car uses an alternative energy source, such as biodiesel, electricity, natural gas, hydrogen or ethanol, you could be eligible for a discount on your premium. Farmers, Travelers and Progressive are just a few of the companies that offer these discounts.
- Pay-as-you-drive programs. Pay-as-you-drive insurance allows you to pre-purchase coverage for a specified number of miles at a substantial discount, sometimes up to 60 percent. Costumers don't need to buy more coverage until they exceed that mileage, creating an incentive to drive less. A 2008 report from environmental organization Ceres found that pay-as-you-drive programs reduced miles driven by 10 percent to 15 percent. Although the concept of mileage-based insurance has been around in the United States since 1998, it has become more common in recent years. Ceres found that more than two dozen insurance companies now offer pay-as-you-drive programs, including Progressive and GMAC (which monitors mileage through its OnStar technology).
Finding discounts If you drive a hybrid or alternative energy vehicle, make sure you insure your car through a company that offers a discount. The Ceres report found at least 17 auto insurance companies that provided discounts for fuel-efficient or alternative fuel vehicles.
If you don't drive a hybrid and still want to save on auto insurance, consider a pay-as-you-drive program. As of late 2010, pay-as-you-drive programs were available in 35 states, most recently California.