Conventional vs electric or hybrid – choosing a new car is fun, but environmental concerns are increasingly a part of the selection process.
On top of the usual factors you normally consider – make and model, what you can afford, does it suit your needs, and, of course, colour – how the car is powered is becoming more and more relevant.
Many drivers are already mindful of the negative environmental effects of diesel or petrol vehicles. They're also becoming aware that the choice of either a petrol, diesel, hybrid or an electric car will affect the cost of their insurance premiums.
Because insurance companies have relatively little experience of insuring electric vehicles, and because they're more expensve than equivalent petrol and diesel cars, the cost of insuring them tends to be higher. But what you might save on insurance with a conventional vehicle, you could lose by higher fuel costs and taxes.
For new cars registered from 1 April 2017, the first year tax rate for cars costing under £40,000 depends on their official emissions – ranging from £0 for zero-emission cars up to £2,000 for cars emitting more than 255g/km CO2.
After the first year, the standard yearly rate is £140 for all except zero-emission cars. If the car's list price is more than £40,000 you'll have to pay an extra £310 a year for 5 years, even if it has zero CO2 emissions.
However, the government has announced the ban of all new diesel and petrol cars from 2040 to help improve air quality, particularly in cities. As a result, several car makers are introducing 'diesel scrappage schemes' for older diesel cars that are traded in for new petrol, hybrid or electric cars.
If the ban is confirmed, it may accelerate the wider shift towards hybrid and electric cars, and in turn the cost of insuring these cars is likely to fall.
Electric vehicles (EVs) are increasingly becoming a viable option for people considering their next car purchase. There are many benefits to owning one:
- They're better for the environment.
- No car tax for new vehicles as long as they cost less than £40,000.
- No London congestion charge to pay.
- Some towns and cities offer free parking for electric vehicles.
- They cost just 2–3p per mile to run, compared with an average of 16p per mile for a petrol or diesel car.
There are perceived limitations to electric cars, such as their driving range and the number of charging points. But hundreds of new charging points are being provided every month, and many of these are 'super chargers' that will provide almost a full charge in less than half an hour.
In addition, new EV models have a range in excess of 200 miles, where the average UK car journey is only 8.9 miles (according to the government's latest UK Travel Survey). So electric can be an ideal choice for many.
Although the initial cost of a new electric car is higher than an equivalent petrol car, an OLEV grant (Office for Low Emission Vehicles) of £3,500 is available towards the cost of a new electric car (with CO2 emissions of less than 50g/km and a zero emission range of at least 70 miles). There is also the Electric Vehicle Homecharge Scheme, which provides a grant of up to 75% towards the cost of installing a home charger.
Electric vehicle costs
Many insurers don't currently offer cover for electric vehicles, but this will change as they become more common. Meanwhile, it's still worth checking each year what the insurers of electric cars are offering – as the market becomes more competitive, costs are likely to fall.
There's also evidence suggesting that EV drivers are less likely to be involved in a crash, partly due to the different driving techniques involved, and the range of safety technology that comes as standard with such cars.
The general cost of car insurance depends on various factors including your age, driving history, where you live, and of course the cost of repairing a car after an accident.
EV insurance tends to be more expensive because the cars cost more than an equivalent conventional vehicle, and they're equipped with technology that's costly to repair or replace.
Also, an electric car damaged in a crash is more likely to need a specialist repairer, as well as a body shop, so insurers factor all this into their premiums as well.
It's also important to check with an insurer to see just what is covered. For example, if someone suffers an electric shock from a home charger, or trips over a charging cable, does it fall under your home or car insurance? And some EV owners lease, rather than buy, their car battery, so ask your insurer if they would cover a car with a leased battery.
Electric car insurance benefits
Insurers may offer electric-car drivers a discount because of the vehicle's generally better safety credentials. Yet contrary to popular opinion, EVs tend to have much better performance than conventional vehicles.
A Nissan Leaf has better acceleration than most family cars, while a Tesla can go from 0–60 in less than 3 seconds, making it one of the fastest accelerating cars on the market. Nevertheless, excessive speed or acceleration are energy hungry, so frugal driving is required to increase the range.
Some insurers also offer a discount rewarding the driver for simply making a greener choice. EV drivers are also seen as more careful because of their thoughtful approach to driving and vehicle choice.
The higher cost of insuring an EV can be partly offset by other money saving benefits, such as no car tax or congestion charge. There are now several specialist insurers that cover EVs and hybrids, taking the safer driving and environmental benefits into account when costing up the insurance. Always look around to find the best price.
Hybrid cars have become increasingly popular over the last few years. They work by combining an electric motor with a petrol (or diesel) combustion engine. Hybrids can run just on battery power, such as in built up areas, or petrol when speed and distance are required. Some have a supplementary engine that charges the battery when it becomes low, known as a 'range extender'.
Hybrids are ideal if you want lower CO2 emissions while avoiding electric vehicle limitations like range and battery capacity. Plus the fuel usage of hybrid cars can be much more efficient, usually around 15–30%, than normal cars.
A lot of hybrid cars are also exempt from congestion charges if they emit less than 75g/km.
Most hybrids nowadays are 'plug-in' models and qualify for a range of grants. The battery range of plug-ins is greater than hybrids that rely on generation from the engine alone.
Hybrid car insurance costs
Insurers are still not being completely confident of the claims experience associated with the new technology. Like fully electric cars, they recognise that the engine and parts in a hybrid are more expensive to repair than a conventional car after an accident, so insurance premiums can be more expensive. And depending on the damage, hybrids may also have to be repaired by a specialist mechanic, which drives up the premium further.
Most motor manufacturers are now committed to developing vehicles that are at least partly driven by electric motors. As they come on to the market, insurers will have to provide cover for them and premiums are likely to fall.
Hybrid car insurance benefits
Hybrid cars are more common than pure electric cars, EVs, so insurance premiums for them are more competitive – the majority of insurers will cover a hybrid. And hybrid owners, like EV drivers, are regarded as safer and more careful. Some insurers take this into account, particularly specialist ones that offer better rates on EVs and hybrids.
The road ahead
As the government continues to place tighter restrictions on petrol and diesel cars, hybrid cars will become more common and so cheaper to buy. This in turn will bring down the average cost of their insurance.
The perception of electric cars is slowly changing too, and according to our research the sales of electric car sales look set to soar. Going electric is fast becoming an easier choice to make.