Insurance boost for green drivers

By Gráinne Gilmore
May 22, 2006

KUDOS for saving the planet, congestion-charge-free trips through London and discounted car tax are just some of the perks for hybrid car drivers. But from today, they can add another to the list: cut-price insurance.

More Than, the insurer, is offering discounts on motor cover for drivers of hybrid cars.

Hybrid cars are more environmentally friendly than petrol-only cars because the battery-operated motor which runs the car when it is not moving and which boosts acceleration helps to cut carbon dioxide (CO2) emmissions.

Keith Maxwell, head of motor insurance at More Than, said: "Green motoring is going to be a massive growth area for the car industry as petrol prices continue to rise and concern over global warming grows. We want to financially reward drivers who are taking steps to do their bit for the environment."

Under the new pricing regime, More Than will move each hybrid down by two insurance groups. Insurers use these groups, which run from 1 for the lowest-risk cars to 20 for high-risk vehicles to calculate the cost of insurance.

David Cameron could cut the cost of insuring his Lexus GS 450h hybrid by more than £50 under More Than’s new pricing regime, while a 37-year-old driver of a Honda Civic Hybrid living in Birmingham would the see premiums fall from £617 a year to £592.

But the temptation of a insurance discount may not be enough to persuade drivers to go green, as hybrid cars are usually more expensive to insure than their petrol-only counterparts. Insurers say this is because they are relatively new to the market and so there is less claims history.

Andrew Davis, director of the Environmental Transport Association, a motor breakdown company, said: "Cutting insurance costs for hybrid cars is a great idea if it develops debate and encourages more people to move to hybrid cars. But it is not a long-term solution, as the cost of motor insurance should reflect the actuarial risk."

Motorists who do not want to buy a new hybrid car could still cut their insurance costs at More Than by switching their car to Liquified Petroleum Gas (LPG). But converting a car to LPG costs between £1,700 and £2,300, so recouping the cost from cut-price insurance could take years.

Industry experts expect other insurers to jump onto the bandwagon in coming months. Peter Gerrard, of insuresupermarket, the insurance price comparison website, said: "Once one insurer starts doing something different, it is not long before other companies will get in on the act."