STUDY: Despite insurance breaks, hybrids driven more, cost more to fix, and get more tickets
2010 Honda Insight EX - Click above for high-res image gallery
Conventional wisdom is that hybrid vehicles reduce our dependence on foreign oil and emit fewer environment-hurting CO2 emissions. When comparing a hybrid to a conventional gasoline-powered model on a mile-by-mile basis, there's some logic to this argument, provided the pricing disparity between the two models isn't too broad. However, a new study by Quality Planning shows that hybrid owners drive much more than non-hybrid owners, potentially negating the benefits of the added battery pack and electric motor.
Quality Planning studied nearly 360,000 vehicles throughout 2007 and 2008 to analyze driving habits, and some of the study's findings are pretty surprising. According to the survey, hybrid and non-hybrid drivers have statistically similar commutes, but hybrid owners drive their vehicles 25 percent more (2,000 miles) in non-commuting scenarios.
Dr. Raj Bhat, president of Quality Planning, thinks part of the reason for these findings has something to do with the fact that high mileage drivers are typically more interested in hybrids than infrequent drivers.
What we don't know is whether owning a hybrid vehicle encourages people to drive more miles each day or take more pleasure trips. High-mileage drivers appear to be attracted to these vehicles, so insurers should take steps to verify the intended use of hybrids and validate actual miles driven wherever possible.The study also shows that hybrid owners are significantly more likely to receive traffic tickets. According to the survey, Toyota Prius owners received .38 tickets per 100,000 miles driven, versus a non-hybrid average of .23 tickets per 100,000 miles. That's a 65 percent differential. One possible explanation for the ticket disparity has to do with where hybrid owners live. Quality Planning found that hybrid owners are more likely to live in an urban setting, where tickets are more frequently issued.
If you really want a hybrid and you don't want to hear any more bad news, you should stop reading. QP also found that repair costs are significantly higher for hybrid owners. The Ford Escape Hybrid, for example, costs 31 percent more to repair than the gasoline-only model, while repairing the Toyota Highlander Hybrid will reportedly add 45 percent more cost. A recent report by IntelliChoice that found that, in the long-term, hybrids and diesels are actually cheaper than gasoline-only vehicles.
The text below illustrates how much on a per dollar basis hybrid repair costs for collision and comprehensive coverage versus one dollar for a non-hybrid. The disparity is shrinking every year, but according to QP, hybrids still cost more to fix. Hit the jump to view the Quality Planning press release.
Collision Comprehensive
Coverage Coverage
2006 Hybrid Models $1.16 $1.75
2007 Hybrid Models $1.09 $1.35
2008 Hybrid Models $1.13 $1.17
[Source: Quality Planning via Marketwire]
PRESS RELEASE:
SAN FRANCISCO, CA--(Marketwire - July 15, 2009) - With gas prices on the rise again, energy-conscious consumers are looking to save on fuel costs, and hybrid vehicles are a popular choice when gas mileage is a primary concern. However, an analysis of the driving habits of about 360,000 vehicle owners by insurance services company Quality Planning has concluded that many owners of hybrid vehicles drive as much as 25 percent more miles than owners of non-hybrids, and that hybrid vehicles are often more expensive to repair.
Numerous studies have compared the cost of ownership of hybrid vehicles versus conventionally powered vehicles, but driving behaviors of the owners of hybrids and vehicle repair costs are generally not part of the analyses. To understand driving behaviors of hybrid vehicle owners, Quality Planning looked at classes of vehicles for which both hybrid and conventional engines are available and examined annual mileage for both vehicle types. Also considered were two common auto insurance rating variables: everyday driving (normally termed "pleasure use" by auto insurers) and "high-commute" driving (defined as commuting more than 15 miles per day).
Do hybrid vehicles encourage owners to drive more?
Quality Planning found that while the mileage for high-commute drivers was roughly the same for both types of vehicles, those drivers who use their hybrid vehicles for non-commuting purposes drove an average of 10,500 miles per year -- 2,000 miles (or roughly 25 percent) more than non-commuting drivers of non-hybrid vehicles.
"The additional miles driven by hybrid vehicle owners would seem to offset the net ecological benefit of owning a fuel-efficient vehicle. After all, a gallon of gas is a gallon of gas, no matter which type of engine is burning it," said Dr. Raj Bhat, president of Quality Planning. "What we don't know is whether owning a hybrid vehicle encourages people to drive more miles each day or take more pleasure trips. High-mileage drivers appear to be attracted to these vehicles, so insurers should take steps to verify the intended use of hybrids and validate actual miles driven wherever possible."
To further assess the risk represented by hybrid vehicles, Quality Planning looked at the demographic profile of their owners and found that they are frequently women, typically older, more affluent, and often live in cities. Quality Planning also looked at the number of moving violations issued to Toyota Prius drivers and found that those drivers tend to get more than their fair share of traffic tickets (0.38 violations per 100,000 miles driven, compared with an overall average of 0.23). However, this 65 percent difference may be because urban drivers generally receive more traffic citations.
Will a damaged hybrid cost more to repair?
Quality Planning also looked at the loss experience of conventional vehicles versus hybrids by comparing the collision and comprehensive loss costs of both kinds of vehicles. Loss costs include impact of both frequency (the number of claims per 100 insured vehicle years) and severity (the dollar impact of a claim). For all 2008 model-year hybrids, collision coverage loss dollars were 13 percent higher, and comprehensive coverage loss dollars were almost 17 percent higher. The 2006 and 2007 models had substantially higher comprehensive losses.
When comparing specific 2006-2008 models, the highest collision loss costs were associated with the Toyota Highlander hybrid (45 percent higher) and the Ford Escape hybrid (31 percent higher). In general, there were increases in both frequency of claims and severity of claims for hybrid vehicles. When compared with a baseline loss cost of $1 for the equivalent non-hybrid model, the hybrid models had the following loss costs:
Collision Comprehensive
Coverage Coverage
2006 Hybrid Models $1.16 $1.75
2007 Hybrid Models $1.09 $1.35
2008 Hybrid Models $1.13 $1.17
"These findings should be of particular interest to auto insurers. Some currently offer policy discounts on hybrid vehicles. A 25 percent increase in miles driven or a 30 percent differential in loss costs is very significant," added Dr. Bhat.
Study methodology
Quality Planning sampled 359,309 vehicles from multiple carriers across the country over a two-year period from January 2007 to December 2008. The vehicles were re-underwritten using Quality Planning's proprietary program for correcting rating errors, Precision Re-Underwriting™. The vehicles analyzed were hybrid vehicles that had equivalent non-hybrid counterparts. The annual mileage estimates were obtained from Quality Planning's proprietary RISK:check® process, which uses statistical estimates and odometer readings when available; the estimates were confirmed by policyholders through mail and phone contact.
About ISO
A leading source of information about risk, ISO provides data, analytics, and decision-support services to professionals in many fields, including insurance, finance, real estate, health services, government, human resources, and risk management. Using advanced technologies to collect, analyze, develop, and deliver information, ISO helps customers evaluate and manage risk. The company draws on vast expertise in actuarial science, insurance coverages, fire protection, fraud prevention, catastrophe and weather risk, predictive modeling, data management, economic forecasting, social and technological trends, and many other fields. To meet the needs of diverse clients, ISO employs an experienced staff of business and technical specialists, analysts, and certified professionals. In the United States and around the world, ISO helps customers protect people, property, and financial assets. For more information, visit www.iso.com.
About Quality Planning
An ISO business, Quality Planning is focused exclusively on providing rating integrity solutions to auto insurers. Quality Planning works with insurance companies to identify areas of significant rating errors using sophisticated database management, statistical analysis and modeling, customized survey design, and highly targeted customer interaction. Quality Planning helps clients work within their existing rating plans and charge fair prices to policyholders based on a true representation of risk. The company was founded in 1985 and is headquartered in San Francisco. For more information, visit www.qualityplanning.com.
Reader Comments (Page 1 of 1)
Spence 6:26PM (7/16/2009)
This kind of study has some serious flaws. The cohort of "hybrid owners" is self selected, not random. Thus, that information is only applicable to the selected cohort and useless to an individual who would have his own habits. Also, it's entirely possible that people are driven to buy hybrids because they have longer commutes or more miles to cover and want to save per mile on their needs. Since you are thus comparing the hybrid not to an average regular car, but to the regular car that it replaces on those longer commutes, then the positive impact of that cohort owning hybrids is greater, not less.
That said, the info about repair costs is troubling, and I've no real explanation for the ticket results, except again that this is a self-selecting cohort, and that it is possible that cops target hybrid drivers, whether consciously or not.
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Matt 7:56PM (7/16/2009)
Spence is right, drivers with long commutes are definitely more likely to drive a hybrid than the average commuter since they stand to gain the most from the investment. As for the ticketing issue, I would argue that the particular demographic that hybrids are most marketed to, and who are most likely to purchase the vehicles anyway (ages 15-35) tend to have more speeding tickets than any other age group, so they will have more tickets per capita since the age is effectively trimmed and older drivers tend to have fewer speeding tickets. Maintenance costs are always more expensive on proprietary parts, i.e. battery packs that are not readily available to roadside repair shops, thus you are stuck with the dealer's outrageous fees. I don't think this study is that surprising.
Mike!!ekiM 10:52PM (7/16/2009)
Urban areas have more speed traps And more police. Some townships will write you a ticket even if they "catch you" going 5+ over the limit, which should be in the statistical margin of error of speedometers and radar guns.
nrb 12:16AM (7/17/2009)
Matt: "As for the ticketing issue, I would argue that the particular demographic that hybrids are most marketed to, and who are most likely to purchase the vehicles anyway (ages 15-35) tend to have more speeding tickets than any other age group,"
I'd love to see data to back that assumption up. Every single hybrid driver I know is over 35. Now that I think about it, they're all at least 50.
I'm not saying your wrong, it just doesn't fit with my observations.
Chris M 2:06AM (7/17/2009)
Yep, the folks most likely to buy a hybrid are those that drive the most. I hope they don't confuse cause and effect. Buying a hybrid does not cause someone to drive more, it is having to drive more that causes hybrid driving.
By the way, not every hybrid owner drives a lot. I don't drive much as my situation has changed since I got my '03 Prius.
Matt 9:04AM (7/17/2009)
Mike,
That's a different perspective than what I have seen, but you're right, I have no statistics to back up my assumption. I am looking at the marketing efforts of the Prius and Insight combined with my own observations. The only three people I know that own a hybrid are all under 30 (1 Camry and 2 Prius), and the majority of hybrid drivers in my area are young. This may not be true for the rest of the country, but at least in AL it has been my observation. I'd love for this study to dig a little deeper.
Matt 9:06AM (7/17/2009)
Woops, that should have been nrb, not mike. Oh well... sorry for the OP Spence.
CaramelZappa 7:15PM (7/16/2009)
Makes sense that repair costs are higher. A hybrid engine is a lot more complicated than a gas engine and terribly more complicated than an electric drive train. Since the tech is relatively new your average mechanic isn't used to working with it.
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Chris M 1:56AM (7/17/2009)
Um, I think they were referring to the repairs after an accident, which rarely involves the hybrid components, unless the vehicle is totalled.
Actual maintenance costs tend to be less with hybrids, as the electronic components are very reliable, and the IC engine and friction brakes get less usage. Where the Prius has been used for taxi service, the savings in maintenance costs were substantial.
Collin 7:20PM (7/16/2009)
If you only drove 10 miles a day, what would you care if your car gets 10 mpg or 50mpg? I drive 50 miles a day plus put tons of miles driving to bike races on the weekends, so naturally, I was drawn to a car that gets great gas mileage. I have a 2000 Honda Insight. Not sure about the tickets thing.
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Dave 8:19PM (7/16/2009)
They say that hybrids are driven farther than non-hybrids in non-commute situations.
Well - most families have two+ cars in them. When taking a drive in a non-commute situation (which typically means a road trip of some sort), aren't you more likely to take the car with better fuel economy?
From experience with people who have hybrids, I know this is the case. Since we got ours, we do all our road trips in the hybrid and the gas guzzler is only used for the short daily commute (thy hybrid is used for commuting, too).
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nrb 12:11AM (7/17/2009)
I do the opposite. For the commute, I drive my little car. For trips, we take the big SUV. Why?
The trip may be several hundred miles, but it's nothing compared to hundreds of days of commuting. After a year It's the commuting that chews up the gas, not the trips. For the trip, I'd rather have the comfort and the room of the SUV.
Dave 2:00AM (7/17/2009)
My "gas guzzler" isn't a SUV, it's a Subaru that averages about 24mpg. Both cars get used daily for commuting approximately the same number of miles. Interior space wise, the Prius is slightly larger. Whenever we have the option, we use the Prius instead. Before the Prius, the Subaru got more miles. Now the Subaru doesn't get many (about 6k/year) and the Prius gets the most (about 12k/year).
stevejust 8:20PM (7/16/2009)
"However, a new study by Quality Planning shows that hybrid owners drive much more than non-hybrid owners, potentially negating the benefits of the added battery pack and electric motor."
This sentence makes no sense to me. Wouldn't we all want the highest mileage drivers in the most fuel efficient cars? And wouldn't they be acting rationally, since the more miles they drive, the faster they recoup the hybrid "premium"?
Rather than negating any effects of the added battery pack and electric motor, they are maximizing its advantages.
And not all hybrid drivers drive a lot. I have a 2004 with 39,100 miles on it, and my car is sitting at home right now because I rode my bicycle to work -- like I do most days.
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A Siegel 11:47PM (7/16/2009)
Another significant difference. In almost every household that I am aware of which has a hybrid and a non-hybrid, the hybrid is the car of choice for all appropriate trips and thus takes up the majority of 'family' driving.
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Ernie 6:02PM (7/17/2009)
Yes, this is known as Jevon's Paradox:
http://en.wikipedia.org/wiki/Jevons_paradox
If people want to use less of a resource, they have to actually *use it less*. Making the thing more efficient only means that it becomes cheaper to run, therefore gets used more.
If you want to be green, get out of your damn car already.
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