What connection could there possibly be between car insurance and the environment? Not much of a link, on first glance – if you drive, the assumption is that you’re not that concerned about carbon footprints, CO2 emissions, or any other damaging factor that cars represent for the environment. This assumption, however, has started to be challenged in recent years, with the increasing popularity of and interest in hybrid and electric cars. While engineers are keeping busy with devising new technologies to make electric cars more efficient and easy to charge, the insurance industry in various corners of the world is also putting in its share of effort toward keeping the environment clean. It may be a case of corporate guilt, in which representatives of the insurance industry are struggling to make amends for past mistakes, yet this is immaterial to the point of this article. Today we’re taking a look at how the insurance industry is working for a safer, greener, and cleaner world.
Coverage you didn’t even know existed
The topic of car insurance can get rather thorny and complex, especially since there is a broad range of variation across legislatures. For instance, in the United States the law requires drivers who, for some reason or another, had their license suspended or revoked, to take out a special kind of insurance. SR22, http://www.sr22insurance.net/ explains, is pricier than typical coverage, but it is mandatory in the above-described scenario. It is a legal measure meant to make sure that accidents don’t happen and that the streets are safe for one and all. Similarly, green car insurance has also been devised for ethical purposes. Providers that offer this kind of coverage will employ a carbon offsetting strategy, which ensures that, though driving, you are still making an effort to keep the environment healthy.
A typical green vehicle coverage policy is purchased after the car in question has been assessed for the level of CO2 emissions it produces within a year, based on mileage, engine size, and type of fuel employed. The more pollution the car produces, the higher the number of ‘carbon credits’ that the policy holder will have to pay for, under the insurance scheme. Depending on where the driver is based, these carbon credits can mean different things, from taking part in a tree planting effort, to recycling, to partaking in any sort of ecological plan, project, or action. Some insurers even donate a part of the premium paid for such coverage to environmental NGOs. Of late, given how popular green cars have become, some insurers will even reward their drivers, by offering them a bonus on their premium. Of course, like SR22 insurance, green insurance can also run up some significant costs – but the long-term investment makes it well-worth it. However, it is important to make sure that your insurer is trustworthy before you sign up, as recent cases of carbon credit fraud indicate.
Driving smart means driving green
… at least in the United Kingdom. Initiatives aimed at promoting smart driving have been around for several years now. One of the very earliest ones, as revealed by the Internet, was initiated in September 2007, by the UK’s Commission for Integrated Transport. The commission issued a report, whose goal was to investigate and reveal driving methods that could lower the level of personal vehicle carbon emissions. The independent agency, which then acted as the government’s transport advisor, identified that there are several ways in which drivers can become smarter and implicitly greener:
- Accelerating and braking only when it is absolutely necessary, without abusing these two functions of the car;
- Keeping tire pressure at an optimal level;
- Observing speed limitations;
- Driving with the windows closed, which would prevent the car from having to use extra fuel, in order to counter drag effects;
- Stopping the engine in heavy traffic.
At the time of its release, the report was welcomed by representatives of the UK’s automotive industry, who also stated that the industry itself is investigating new technologies that would help keep the environment cleaner. However, encouraging responsible behavior in traffic was hailed as a great decision, which would also make cars more efficient, subjected to less wear and tear, and, hence, more durable. It’s also worth noting that 2007 was a great year for greener cars in the UK: according to data released by the country’s road taxation authority, in the year up to June 2007, 60.7 per cent of the cars sold in Britain produced less than 165 grams of carbon per kilometer.
In what concerns car insurance, both less pollutant cars and better behavior in traffic are likely to have a positive impact on premium costs. Drivers who adopt responsible driving methods face a lower risk of causing accidents, while maintaining their cars in better shape. Both the state of a vehicle, as well as the track record of its driver, are decisive factors in determining car insurance rates and premiums.
The Golden State is also the green state
Of course, the UK is not a singular case when it comes to places around the world where the automotive and insurance industry work together for the higher goal of keeping the environment clean. In 2008, California’s Insurance Commissioner Steve Poizner announced that the state would introduce ‘pay-as-you-drive’ car insurance. The aim of this measure was to promote less frequent use of one’s car, which, in turn, would lower greenhouse gas emission. According to the former California laws on car insurance, rates were based on an estimate of the miles a car would be driven for, during the coming year. The proposed reform would allow buyers to check for their mileage via an odometer, their car repair documents, or any other device. Of course, the issue of privacy was raised with regard to the proposal and the commissioner explained that checking for the number of miles could not be done via GPS for this exact reason. The Environmental Defense Fund of the California Department of Insurance also supported the decision, with data that says a 30 per cent opt-in for pay-as-you-drive insurance on the part of drivers would help lower carbon dioxide emissions by 55 million tons from 2009 to 2020, while also saving the drivers a total of 5.5 billion gallons of gas and $40 billion in car repair costs.