Recent Study Shows Hybrids May Mean Higher Risk for Insurers

Quality Planning Corporation of San Francisco, California is a group of companies that provide data, analysis and other services. They recently conducted a study of 360,000 claims submitted to twelve insurance companies over the last two years, specifically looking at the differences between hybrids and conventional vehicles.

Quality Planning Corporation’s president Raj Bhat reports that many consumers who are drawn to hybrids are high-mileage drivers. They also tend to receive more tickets and have more expensive accidents than conventional vehicle owners according to the study.

Discounts are frequently given to hybrid drivers, who perhaps seem like a kinder, gentler type of driver. This study suggests that perception may have to change.

If this becomes a trend, insurance companies may have to find ways to make up the difference by raising prices.

In its study, Quality Planning looked at 2008 models as well as some models a few years older.

They found that the cost for insurance companies to provide collision coverage on the 2008 model hybrids was 13% higher than conventional cars.

Comprehensive coverage, which includes damages that are non-collision related, was 17% higher for the hybrids. The older, and especially the larger the hybrid models were, the larger the difference was in higher cost for insurance companies.

Representatives from Honda and Toyota had no comment regarding the study, and Ford made no comment on hybrid repair costs.

The study discovered that, on average, hybrid vehicle owners who bought their cars for non-commuting purposes actually drive 25% more than conventional car owners. Mileages for commuters using hybrids and non-hybrids were about even.

Toyota Prius owners received 65% more traffic tickets than drivers of conventional vehicles in similar models.

Who are the "typical" hybrid owners? According to the study, they are older, more affluent women who tend to live in urban environments.

Robert U’Ren, senior vice president of Quality Planning, says that these factors may account for the higher ticket numbers.

"What we don’t know is whether owning a hybrid vehicle encourages people to drive more miles each day or take more pleasure trips," Bhat said.

Insurance companies have little data to back up their current insurance practices in regard to hybrids. Edmunds Inc. reports that although hybrids made up only 0.8% of the market in the last ten years, they comprised 2.6% of vehicles sold so far this year.

This rapid growth is expected to continue, and insurance companies will continue to keep close watch on accident claims and adjust policy costs for the hybrid drivers accordingly.

Neither Allstate Corporation nor State Farm Mutual Automobile Insurance Co. report changing their practices just yet. Prices for hybrid and conventional vehicle insurance policies from the two are still very similar.

Some insurers, however, are still offering big discounts to hybrid owners. Farmers Group Inc. currently charges hybrid owners 10% less for their coverage than conventional car owners.

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