Eco car insurance policies allow drivers to address concerns about harmful CO2 emissions and the damage that vehicle use may cause to the environment. What is carbon friendly or carbon neutral insurance, how does it work and who covers the extra costs?
What is Eco Insurance?
This kind of policy gives all the regular benefits and coverage that you'd expect from car insurance but adds on an element that allows you to offset some of your CO2 damage to make vehicle use more carbon friendly or even neutral. This could be beneficial to drivers who want to carry on using their vehicles, but who also want to make good some of the environmental damage they may be causing.
How Do Carbon Friendly and Carbon Neutral Car Policies Work?
Insurers and brokers in this sector will usually commit to investing or donating a percentage of average emissions into carbon friendly projects such as reforestation, renewable energy and energy efficiency. Some will give the money to specialist offsetting companies or charities to be used at their discretion; others will allocate it themselves.
It's worth remembering that not all policies give the same percentage. So, for example, one could offer to offset 20-25% of emissions; another may go right up to 100%. This could be based on either average vehicle use or on specific individual usage. If you are dealing with a broker, then the percentage could be based on the commission or profits they make from selling you the insurance in the first place.
Who Pays Carbon Offsetting Costs on Eco Insurance?
Some insurance companies openly charge extra for offsetting; others will cover the costs. Brokers may take a different approach by using part of the commission earned for selling policies. It is worth noting that broker offsetting doesn't have to involve the insurer. This is often done as an independent measure and, if the ethical or green status of an insurance company also matters to you, then you may need to research policies offered in more detail.
It may not, however, always be immediately clear who pays to offset, and you may need to contact the company directly to find out. Some people may be happy to pay extra to minimise emissions damage; some may not. If you aren't sure if charges are being loaded on to premiums, then an insurance comparison site can help you compare costs with standard policies. If regular car insurance would be a lot cheaper, then you could use some of the money you save to pay for carbon offsetting yourself.
Finally, it's worth remember that there are other ways of saving on car costs and helping the environment. In the UK, for example, the band of car you choose will affect your road tax costs. Switching to a vehicle with lower emissions could save you extra money.
Sources
- The Green Insurance Company ("Carbon Offsetting")
- The Co-operative Insurance ("ecoinsurance")
- GoGreenCompare.com (" Go green and help the environment ")
Accessed online 2nd March 2011.
Carol Finch - Carol Finch is the Topic Editor for Retirement Planning, Budgeting, E-Commerce & Technical/Business Writing on Suite101.
