This is my third article about green auto insurance. Why is this topic so important? Many of my friends have purchased cars such as the Toyota Prius and the Honda Civic Hybrid. People are willing to go out of their way to get a hybrid car as a symbol of their concern about the environment and to have the chance to save some money on their fuel bills. After spending that much effort to get a car that conserves gasoline, they’ll have to make sure that their car is insured. Are you really going to just consider price when you’re buying auto insurance? A little more research and you can find a policy that helps preserve the environment. Of course, greenwashing is always a problem to be considered, so today I am going to look up a few auto insurance companies and find out how green their policies are.
Green auto insurance is important enough that Consumer Watchdog has done some reporting in this area. One of the most visible auto insurance companies is Geico. We’ve all seen the commercials with the Geico gecko, but how green is this company? Got2BeGreen lists five companies as the most green auto insurance companies, State Farm, Progressive, Geico, Allstate, and Esurance. This is a bit surprising considering the policies that other companies have offered, including Better World Company, AAA, and Fireman’s Fund. So I decided to look up Geico and see what I could find. This site, Eco Smart Insurance mentions some of Geico’s green policies. The Geico Auto Repair shops have to take an environmental and safety training program. That’s certainly helpful. Geico sponsors tree planting and wildlife conservation, and has made efforts to reduce its use of waste paper. Steps in the right direction, although the special policies competitors offer including bicycle roadside assistance and discounted hybrid car rentals aren’t mentioned here.
We’ll look up State Farm next, another major insurance company. Eco Smart Insurance lists some of the benefits of their policies. All of the State Farm buildings are Energy Star rated, they have a large alternative fuel vehicle fleet and they power their operations center in Austin Texas on green power. Again, no hybrid car rental discount, it looks like Better World Company is still the leader in that area.
Progressive is also mentioned, so I decided to look them up and find out what kind of green policies they offered. MyRate is a big selling point. The California legislature is implementing pay as you go laws, which tax drivers according to the amount of miles they drive. MyRate gives discounts for cars that are driven less often, allowing people who make less trips and use carpools and public transportation to pay lower premiums for their auto insurance. Drivers do have to plug a device into their car to track mileage, which seems intrusive to me as it records driving speed and frequency as well as total mileage. Should give the actuaries better numbers to crunch, so you can get discounts this way if this is okay with your standards of privacy.
Many agencies claim to have created a green auto insurance plan. Since this is a newer field, there doesn’t really seem to be a standard, although there are a few subjects that keep turning up. One of the most common items seems to be the discount on a hybrid car rental. Fireman’s Fund has a really interesting offer that pushes customers to switch to a green vehicle. This contract states that if a customer’s car gets totaled in the first three years, the company will replace it with a new hybrid vehicle in a similar make and model as a replacement.
This is very different from the usual policies. Typically if a car is fully covered by insurance and gets wrecked the insurance company pays out the depreciated cost of the car, the client gets a cash settlement. Fireman’s Fund’s green auto insurance policy actually replaces the vehicle with a hybrid, so every time it activates there is one more hybrid and one less traditional vehicle. Very similar to Cash for Clunkers, as that program offered a tradein if a citizen brought in a qualifying vehicle and the dealership destroyed it. Of course, there is one major difference in this arrangement. We aren’t talking about bringing in an old car to the dealership here. You would probably only see this policy take effect if another driver crashed into your vehicle and completely wrecked it, although a loss policy can also cover theft if the car can’t be found.
One other caveat. Fireman’s Insurance is located in Novato, a smaller city north of San Francisco. You would think this policy would be offered to California residents. The Allianz link mentions that the policy is only offered in Arizona, Colorado, Connecticut, Illinois, Maryland, and Texas. The states seem to have nothing in common, must be some actuarial calculation behind it as it seems like demand would be higher in states like California and New York. Recall that the bicycle roadside assistance offered by AAA was available in Oregon and Washington, evidently because they believe that those states have the highest demand. Annoying to see that there are all of these green auto insurance policies available outside of California, which easily would have the greatest demand in my opinion.
Next I went to the Esurance site, after seeing Autoblog suggesting that they had some useful policies. You’re greeted by the pink haired mascot Erin Esurance, complete with a few green vines. Reminded me of Poison Ivy in the Batman series. It’s helpful to be able to use a widely known character like this in environmental public service announcements, which are mentioned on their site.
Looking around the Esurance site the main focus is the reduction of energy use and waste paper in their offices, which is always positive. Not only does this save forests, it also cuts a lot of costs. The site also mentions that all of their claims vehicles are hybrids. Always beneficial to save gas, the hybrids are also suggesting that Esurance can afford a new fleet, so they can afford to pay off a policy. The focus is not on the insurance policy itself for this company, although they’ve put a lot of work into the other aspects of environmentalism so it balances out in my opinion.
After doing some research into the banks I started wondering if the other FIRE industries were interested in redesigning their systems to have a beneficial effect on the environment. It seems like when most people think about green finance, the images that come to mind are loans to companies building solar power plants, windmills, and hydroelectric dams. As we saw earlier today, even a minor change like switching from paper envelopes and deposit forms to an OCR reader can have a large effect when it is implemented across the whole world. So I decided to look up some auto insurance companies and see what plans they have created to save energy and reduce pollution.
AAA is the company I’ve always used. It’s very well known and also has a club associated with the company that can get you discounts of around 10-15% on typical travel expenses like hotel rooms and car rentals. So I decided to see how green this auto insurance company was. Evidently a competitor appeared to challenge them a few years back, called Better World Club. Looks like this auto insurance club was set up to directly compete with AAA based on environmental issues. BWC’s comparison chart claims that it provides many additional services that AAA does not provide, although they also admit that these are premium services and their insurance rates are slightly higher. A few novel services that BWC introduced include bicycle roadside assistance, and discounts on hybrid car rentals, which is a nice feature. One of the items that does stand out is AAA’s $300,000 coverage of travel accident insurance – only available on AAA’s plus plan according to the BWC site, but this could be a potential dealbreaker depending on how heavily one rates it.
AAA did respond to the challenge, and now offers several green services. AAA now offers bicycle roadside assistance according to BWC. Interestingly enough, BWC actually mentions this benefit prominently in their own comparison chart, and it did not come up on my local AAA site which was surprising. A little searching showed the reason why. The Oregon Live blog has more information about it. It’s currently only available in Oregon and Idaho. Explains why I don’t see it as my region is Southern California, although I am surprised that it wasn’t rolled out in our state first. The article claims that AAA polled its Oregon members and found 37% wanted bicycle roadside assistance added to their insurance plans, although I wonder if they would remain enthusiastic if the policy fees had a corresponding increase. Another site reports that AAA introduced a Green Response Team at the Superbowl last year, showing off their Segways which also have the benefit of being very agile, improving response speed.