Some auto insurers offering discounts for electric cars

Tamara E. Holmes
While the jury is still out on whether the cost of insuring electric cars will be higher or lower than the cost of insuring gas-powered vehicles, a couple of auto insurance companies are rewarding consumers who embrace a more environmentally friendly approach to driving.
The Hartford announced in April 2012 that it would begin offering new policyholders who drive electric cars a 5 percent discount in Alabama, Arizona, California, Illinois, Kansas, Minnesota, Oklahoma and Texas. Current policyholders who have electric vehicles will receive the 5 percent discount when their policies are renewed. The discount will become available to new policyholders in other states by the end of the year.
The Hartford, Farmers give discounts
The Hartford is offering the discount because the insurer “is committed to environmental protection,” Andy Napoli, the company's president of consumer markets, says in a statement. “This financial incentive is a small way we can thank our customers for helping a greener environment.”
The Hartford has offered a 5 percent discount to policyholders who have hybrid vehicles since 2009.
Farmers Insurance also offers discounts on electric and hybrid cars, spokesman Jerry Davies says. The discount varies by state and type of coverage.
Calls to other insurers, including MetLife and Safeco, revealed that electric-car discounts are far from a trend. “MetLife Auto & Home doesn't offer any special discounts for hybrid or electric cars at this time,” spokeswoman Sarah Faria says. Although Liberty Mutual doesn't offer an electric-car discount, it does give a 5 percent discount to hybrid owners in most states, spokesman Glenn Greenberg says. Other insurers, including Allstate, State Farm and GEICO, couldn't be reached for comment about electric-car discounts.
Pricing the premium
Not only does it remain to be seen whether other insurers will offer electric-car discounts, but questions still linger about how expensive electric vehicles ultimately will be to insure.
Two types of electric, or plug-in, vehicles are on the road these days -- those that are solely battery-operated, such as the Nissan Leaf and the Mitsubishi i, and those with a battery and a gas-powered engine, such as the Chevrolet Volt and the Toyota Prius plug-in hybrid.
One factor affect the cost of auto insurance for electric cars is the cost of the vehicles themselves. “Electric cars or plug-in cars are expensive still,” says John Voelcker, editor of GreenCarReports.com. For example, a 2012 Nissan Leaf starts at $35,200 and a 2012 Chevrolet Volt starts at $39,995 before incentives. The more expensive a vehicle and its replacement parts are, the more it will cost to insure.
However, two considerations could bring down the cost of insuring electric vehicles.
One is how they're likely to be driven. Electric cars typically don't rack up as much mileage as traditional cars.
With cars that run only on battery power, drivers must stop to recharge their cars every 75 to 100 miles. That reduces the likelihood that they'll be driven across the country, Voelcker says. Also, owners are likely to consider electric vehicles as second or third cars, Voelcker says, so they'll split mileage between at least two vehicles.
Safety matters
The other factor that could cut insurance costs for electric cars is their safety record.
“A benefit for drivers of electric vehicles like the Volt and Leaf is that the batteries add weight, which is protective in crashes,” says Russ Rader, a spokesman for the nonprofit Insurance Institute for Highway Safety. “Even though these vehicles have compact dimensions, they weigh as much as midsize or, in the case of the Volt, even large cars.”
In 2011, the institute evaluated the Chevrolet Volt and Nissan Leaf for the first time; each earned top crash-test ratings.
Another thing that affects your auto insurance premium is a vehicle's claims history. But with only 17,000 electric cars sold in the United States in 2011, insurers don't have much data to rely on. That’s not likely to change in the near future, as the electric-car market is expected to grow slowly. “People have this misconception that three years from now every other car in the showroom is going to have a plug,” Voelcker says.
While few insurers currently provide electric-car discounts, that may change as the electric-car market grows. “Some insurers may be slow to get into the game,” Voelcker says, but many are seeing that electric cars have a bright future.

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