In the world of new cars, one could borrow a phrase from the fashion universe and state that hybrids are the “new black.” They’ve become popular with a variety of people for many different reasons, including greater fuel economy and less money spent on gas, lowering the dependence we have on oil, reducing harmful emissions, and the possibility of tax incentives from the state or federal government just for owning one. What’s not to love about hybrids?

When it comes to insuring hybrids, forever, many people are confused. Some believe that insurance is more expensive because hybrids have specific parts that can’t be replaced with anything other than OEM pieces, while others swear that hybrids are less expensive to insure because the demographics of hybrid owners show that they live and work in safer neighborhoods, and are generally better off financially. While both of these theories are partly true, there are other facets to owning a hybrid that affect your insurance, and your enjoyment of the vehicle. Here are a few things you should know:

Mileage Matters
More than any other factor, improved gas mileage remains the key motivator for most hybrid purchases. Why are hybrids more fuel efficient than their gas-only siblings and cousins? It’s because the electric motors these cars are fitted with. Every time you hit the brakes in a hybrid, energy is transferred to the batteries, which then recharge the electric motor, and it’s the motor that is used whenever you are travelling at a constant speed (the gas engine kicks in for starting the car and for acceleration). In those hybrids, like the 2008 Toyota Prius and Honda Civic Hybrid, which were designed to maximize fuel economy, the numbers are extremely attractive:  46 mpg (combined) for the Toyota, and 42 mpg (combined) for the Honda.

Where’s the Incentive?
Fuel economy doesn’t directly affect insurance prices, though it does improve your financial bottom line because you’re spending less per month on gas, but hybrids help you offset your insurance bill in other ways as well. The most publicized offset are the hybrid tax incentives offered by the federal government, but these are becoming less common as hybrid cars become more mainstream. Nevertheless, some vehicles still qualify, and even if they don’t, your state may offer its own incentives, like state tax credits, discounts on public parking, free or discounted use of toll roads, and the ability to drive in carpool and HOV lanes without penalty, even if you’re the only person in your car.

Different Hybrids Get Different Results
When considering the actual cost of owning a hybrid, it’s important to remember that different vehicles get different results. In fact, some hybrids are not even designed to offer better gas mileage, but to improve other areas of performance.  There are hybrid sports cars and SUVs, for example that use their combination of electric motors and gasoline engines to increase their power output, enabling them to use smaller engines. These hybrids use less gasoline than a similar vehicle with a larger engine, but consume MORE than their gas-only siblings with similarly-sized engines. Cases in point are the 2008 Lexus GS 450h, which is rated at only 23 mpg (combined) and the 2008 Ford Escape Hybrid that is rated at 32 mpg.

Trade-in Value
Some hybrids hold their value better than others, but have little to do with being a hybrid. The Toyota Prius, with its distinctive design, will do better when you factor its resale-value into a car loan calculator than will a Ford Escape Hybrid, which is nearly indistinguishable from its gas-powered sibling. The decision to buy a hybrid probably should not be based on its resale value.

So, CAN You Save on Insurance with a Hybrid?
While tax credits are limited to a certain number of people in each state, insurance incentives are not so limited, and they really do exist. Many insurance companies offer discounts of up to 10% for coverage of hybrid vehicles, though mild hybrids (such as the 2008 Saturn Vue Green Line and 2008 Chevy Malibu hybrid) may not qualify. 

When shopping for insurance for your hybrid, you’ll need to provide all the usual information, including the vehicle identification number, but you’ll also want to ask about any discounts for the specific engine/motor combination in your car, as well as any discounts you might earn for anti-theft devices, or your driving record. As well, discounts that apply to all cars still qualify when insuring a hybrid – so your defensive driving class still counts.

The possibility of saving money on insurance should never be the driving force behind your decision to purchase a Hybrid vehicle, but it’s certainly an item for the “pro” side of your pro/con list, and it’s also one of the reasons that hybrids are becoming more popular, and harder to buy.  Combine that with money saved on gas, and the knowledge that you’re helping the planet while you drive, and it’s easy to see why, as of October, 2008, the Honda Civic Hybrid has surpassed the Ford F-150 as the most frequently purchased automobile in the United States.