Hybrid cars

So the price of gas is making you seriously consider purchasing a hybrid car next time around. You’re not alone. The cost of gas has a lot of Canadians miffed at the pump and reconsidering their next new vehicle.

A hybrid is a vehicle powered by a combo of gasoline and electricity. The first hybrid introduced in Canada, was the Honda Insight in 2000. Since then we’ve seen the introduction of the Toyota Prius in 2001, the Honda Civic Hybrid in 2002, the Chevrolet Silverado Hybrid and the Ford Escape Hybrid in 2005, to name just a few. Although relatively new to the Canadian market there’s been a lot of buzz about how much these vehicles can save you in gas because of their fuel efficiency. But do savings appear anywhere else, like your insurance rate?

What other costs or savings are there with a hybrid?
Sure, hybrids are marketed as an environmentally-friendly way to save you money when it comes to the cost of gas, but what about other costs? Or better yet, savings? The following is a snapshot of the costs or savings you might find when buying a hybrid.

Insurance
After comparing online quotes at www.kanetix.ca, for the Honda Civic Hybrid, Chevrolet Silverado 1500 Hybrid, Ford Escape Hybrid and the Toyota Camry Hybrid it appears there is no one particular trend when it comes to the insurance rates for hybrids. When compared to their gas-powered alter-egos, the cost to insure a hybrid vehicle was neither consistently higher nor lower across the country.

Hybrids have not been around long—only since 2000. What this means to insurers is they have very little information on hand about the vehicles—like how often they are stolen, how much they cost to repair after an accident, their propensity to be in an accident or the frequency and severity of injuries if in an accident. If you take out a driver’s personal insurance and driving experience, when it comes to calculating the premium for the vehicle itself, insurers are making an educated guess.

This does not necessarily translate into bad news for hybrid consumers. Even though hybrids are still relatively new in the marketplace, a trend south of the border—where insurers are offering insurance discounts for drivers of hybrids usually around 10%—suggests that insurers like the drivers of hybrids as a group and believe they are low-risk. The good news for Canadians is that the idea of insurance discounts for hybrid drivers is getting some attention here as well. Although not yet widespread, drivers of hybrids will likely benefit from more activity by their insurers soon.

Ticket price
While fuel efficiency is certainly a bonus in your pocketbook, it comes at the expense of a slightly more expensive vehicle – anywhere from $5000 to $6350 more for the hybrid models we looked at compared to the non-hybrid version.*

Maintenance
There is a perception that hybrids cost more to maintain. To offset this perception—and to put their money where their mouth is so to speak—some hybrid manufactures offer warranties that extends beyond the basic coverage on their hybrids. Toyota for example, offers an 8-year (or 160,000 km) warranty coverage on their Prius and Highlander hybrid-related components. Warranty aside, it’s also been reported that a hybrid’s regular preventative maintenance costs are comparable to its gas-powered counterpart.

Government incentives
What about incentives from the Federal or Provincial governments to encourage consumers to buy green? On the provincial level, there is good news if you live in British Columbia, Manitoba, Ontario, Quebec or Prince Edward Island. These five provinces are the only ones to offer a tax rebate or credit (depending on the province) varying from $1,000 to $3,000. Federally, in March 2007 the government introduced in their budget, plans to introduce a ‘Vehicle Efficiency Incentive’ that will offer Canadians a rebate of up to $2,000 for the purchase of an eligible new fuel-efficient vehicle.



Looking out for future trends
While hybrids are still in their early days, interest in these vehicles continues to grow. Auto makers are coming out with more hybrids every year and Canadian consumers are buying them. The www.kanetix.ca snapshot of hybrid vehicles show there is also activity afoot among insurers. Recent announcements about insurance discounts for hybrid drivers suggests you’ll likely see more activity, and hopefully more savings, as insurers and the public learn more about hybrids. We’ll keep you posted as changes happen.~