With a hybrid car or truck, you’ll pay less at the gas pump, while also shrinking your carbon footprint. But often hybrid cars cost more to insure than their conventional counterparts. So will your fuel savings be eaten up by higher insurance premiums?
The short answer: Insurance on hybrids does tend to cost more — but each driver’s costs will depend on their particular situation. And you may find that the difference in insurance costs is smaller than you think. Read on to learn more about hybrid car insurance and some methods you might use to bring your rates down.
Key Points
• Hybrid vehicles cost about 6% more to insure than gas-powered cars on average, though the gap varies significantly by make, model, and year.
• Hybrids’ two-part power systems are complex, requiring mechanics to have specialized knowledge, which drives repair costs higher.
• In calculating comprehensive and collision coverage rates, insurers must account for the substantial cost of battery replacement, which can be as high as $8,000.
• Many insurance carriers offer green vehicle discounts ranging from 5% to 10% per policy period.
• Plug-in hybrids usually cost more to purchase than regular hybrids, and will accordingly be more expensive to insure.
What Is a Hybrid Vehicle?
A hybrid vehicle (HEV), such as a Toyota Prius or Ford Escape Hybrid, is called that because it runs on power from two sources: a traditional internal combustion engine (ICE) plus one or more electric motors and a battery pack.
The hybrid car mostly runs on gasoline, with assistance from electricity stored in the battery pack. The battery gets its charge in part from the ICE and in part through regenerative braking, which is a process for recapturing kinetic energy that would otherwise be lost when the driver slows down. Most hybrids don’t need to be plugged in to recharge, though plug-in hybrid electric vehicles (PHEVs) do offer that option.
The extra boost from electric motors generally helps hybrids achieve better fuel economy and lower emissions than comparable gas-powered vehicles.
How Insurance Companies Set Auto Insurance Rates
In thinking about insurance on hybrid cars, it’s worth revisiting how insurance companies typically set auto premiums. An insurer arrives at the cost of your car insurance by assessing the risk that you, the policyholder, will file a claim and estimating how much your claim might require the company to pay out.
Their calculations involve specific facts about you as well as the vehicle you want to insure. They look at customer-centered information like:
• Your driving record and history
• Your age and location
• Your credit score (in many states)
• How much you drive annually
• The level of coverage you choose
As for the car, they consider:
• Its make, model, and year
• Its purchase price, repair costs, and theft risk
When hybrid cars cost more to insure, that last point is the main reason.
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Are Hybrids More Expensive to Insure Than Gas Cars?
Auto insurance on hybrid cars tends to be costlier than for a gas-powered car — but not dramatically so. On average, hybrids cost around 6% more to insure than ICE cars. Price differences will vary based on a vehicle’s make, model, and year.
Why Hybrid Car Insurance Can Cost More
As a category, hybrid cars are more expensive to insure for several reasons. Here are some of the major factors that drive rates up.
Higher Repair Costs
Hybrids are more complex machines than ICE cars. Each vehicle has two power systems: a combustion engine and an electric motor. The additional components introduce more potential points of failure.
As a result, if something goes wrong with a hybrid, mechanics need to have specialized knowledge to fix it. Not every mechanic is trained to work on hybrid systems, so repair shops that specialize in this work can charge more for their expertise. Even a minor collision may damage expensive sensors or electrical components, pushing repair bills higher than a comparable gas-only car.
Battery Replacement Expenses
A new hybrid battery generally costs between $2,000 and $8,000, depending on the car’s make and model. (The average lifespan of a hybrid battery is at least 10 years, or between 100,000 and 150,000 miles.) Insurers are mindful of a hybrid car battery’s replacement cost, especially for comprehensive and collision coverage, since swapping in a new battery after an accident could require a big payout.
Advanced Technology and Sensors
Many hybrids come loaded with advanced driver assistance systems designed to improve safety. These features include lane departure warnings, automatic emergency braking, adaptive cruise control, and more. And they’re expensive. Repairing, replacing, or recalibrating a cracked sensor or damaged camera system can add thousands of dollars to a repair bill.
Vehicle Value
As a rule, hybrids cost more to buy than equivalent gas cars. The price difference between a hybrid and an equivalent gas-only car can range from zero to $3,000, according to Consumer Reports.
Because insurers base part of their premium calculations on the cost to replace or repair a vehicle, a higher sticker price naturally means hybrid cars are more expensive to insure. And autos that are prone to the most expensive car repairs will see that reflected in their rates.
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When Hybrid Insurance May Cost the Same or Less
Despite all of these facts, it is possible to reduce or even eliminate the difference in rates.
Advanced safety features can actually work in your favor. Collision detection systems, automatic braking, and lane assist reduce the likelihood of accidents. In fact, hybrids are often among the safest vehicles on the road by insurance industry measures. Insurers who recognize these advantages may be willing to offer lower premiums.
The model of hybrid you drive matters, too. Some hybrids — particularly mid-size sedans and small SUVs — have insurance costs that are nearly identical to their gas counterparts. Meanwhile, certain makes and models may qualify for green vehicle discounts that close the gap further; your insurance company can provide more details that are specific to your situation.
And remember that your driving habits, location, and personal record are still the biggest factors in your insurance rate.
In short, the vehicle type is just one variable in a much larger equation.
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How to Lower Insurance Costs for a Hybrid
Though you should be prepared to pay a little extra to insure your hybrid, there are concrete ways to lower car insurance premiums.
• Shop around — and shop often. Insurance rates vary widely between carriers, so your best bet for scoring a lower premium is to get multiple quotes.
• Ask about discounts. Many carriers offer explicit discounts on hybrid and electric vehicle insurance. These deals are sometimes labeled “green vehicle discounts” or “alternative fuel discounts,” and typically amount to 10% per policy period. These deals aren’t always advertised upfront, so ask directly.
• Bundle your policies. Using the same insurance carrier for your auto coverage as you do for your home or renters policy can slice 10% to 25% off your premiums — a discount that’s available to any driver, hybrid or not.
• Raise your deductible. Opting for a higher deductible (say, $1,000 instead of $500) reduces your monthly premium. Just make sure you have enough money set aside in savings to cover that deductible in case you need to file a claim.
• Drive carefully to keep your record clean. Just one moving violation can be enough to hike your premiums. Consider defensive driving courses and usage-based programs, which often reward careful drivers with additional discounts.
Is Insurance More Expensive for Plug-In Hybrids?
PHEVs generally cost more to buy than standard hybrids due to their larger battery packs and their systems that enable external charging. The higher purchase price of a PHEV — sometimes a premium of $5,000 to $10,000 more, depending on the model — tends to push up the cost of insurance coverage as well.
The Takeaway
Hybrids typically cost a little more to insure — but with the right model choice, a few smart discounts, and some comparison shopping, that premium gap can shrink considerably. And when you factor in the fuel savings, most hybrid owners come out well ahead over the long run.
When you’re ready to shop for auto insurance, SoFi can help. Our online auto insurance comparison tool lets you see quotes from a network of top insurance providers within minutes, saving you time and hassle.
SoFi brings you real rates, with no bait and switch.
FAQ
Are hybrid cars cheaper to insure than electric vehicles?
Yes, in most cases. EV insurance tends to run significantly higher than hybrid insurance — sometimes 20% or more — due to EVs’ higher purchase prices, larger and more expensive battery packs, and greater specialization required for repairs. Hybrids, which share repair infrastructure with gas vehicles, tend to occupy a more affordable middle ground.
Does a hybrid battery increase insurance premiums?
It can, yes. Hybrid battery replacement costs range from $2,000 to $8,000, and insurers factor this pricing into their rates for comprehensive and collision coverage. However, the impact varies by insurer and model.
Do insurance companies offer discounts for eco-friendly vehicles?
Many do. Often known as “green vehicle discounts” or “alternative fuel discounts,” these price breaks tend to be around 10% per policy period. The discount may not be applied automatically, though, so you often have to ask about it when getting a quote or renewing your policy.
Is comprehensive coverage more expensive for hybrids?
Yes, comprehensive coverage — which protects against theft, weather damage, and other non-collision incidents — can often run higher for hybrids. In part, this stems from the risk of theft, which can be higher for hybrids, since their batteries contain valuable precious metals. However, to some insurers, hybrids’ strong safety ratings may help offset the theft risk.
Do the make and model of a hybrid affect insurance costs?
Absolutely. An economical hybrid SUV like the Toyota RAV4 Hybrid can cost far less to insure than a luxury hybrid like the Porsche Cayenne. The vehicle’s purchase price, safety record, repair costs, theft rates, and claims history are all accounted for by the insurer’s model-specific calculations.
Photo credit: iStock/Brycia James
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