Do Fuel Types Affect Insurance Costs?


In Europe, and especially countries like the UK, where fuel costs $7 or $8 a gallon, diesel vehicles account for more than half of the new car market because of their high fuel economy. But a host of mitigating factors, including the higher insurance costs for diesel vehicles, could stretch the payback time out by years.

According to a consultant at the UK-based Carole Nash Insurance Company, insurance companies utilize a host of factors, based both on the driver and the vehicle itself, to determine the cost of insurance. One of the main factors in determining insurance costs are the price to repair the vehicle in case of damage. This is where diesel car’s high initial cost really presents a distinct disadvantage.

Because many diesel versions of popular vehicles like the Ford Fiesta can typically run £1000 to £2000 more, the cost to repair these vehicles is also higher. Hence higher insurance costs, which can mitigate any fuel savings. However, many diesel vehicles have lower emissions, and because the UK taxes, in part, based on emissions, your tax bill could be quite a bit lower. Insurance costs also fluctuate based on vehicle; there may sometimes be very little difference in insurance costs between a diesel and petrol-powered model.

That isn’t the only issue holding back the savings on diesel vehicles. In recent years, petrol-powered cars have significantly closed the fuel economy gap, though diesels still hold a distinct advantage in terms of raw mpg. Many diesel engines also require extra fluids, like urea, which reduce emissions but have to be replaced on occasion. For this and other reasons, it can take a decade or more to see actual cash savings when buying a diesel car over an equivalent petrol model.

But if you’re the kind of person who does a lot of driving, and hopes to one day convert your car to biodiesel, than a traditional diesel car may still be worth the extra upfront cost. Just don’t be surprised if your insurance costs for a diesel are slightly higher than that petrol car you just traded in. If you hold onto that diesel long enough though, it’ll start paying you back…eventually.

Source: The Telegraph

About the Author

A writer and gearhead who loves all things automotive, from hybrids to HEMIs, can be found wrenching or writing- or else, he's running, because he's one of those crazy people who gets enjoyment from running insane distances.
  • Jason Carpp

    If I were in the market to buy a new or used car, I’d go for the used diesel. Partly because they get better fuel economy, meaning you spend less time driving hell’s half acre looking for a service station that provides diesel fuel, since the vehicle goes farther on a tank. I also believe that if a car is properly maintained, it should last indefinitely. Yes, it costs more money to do, but so what? You buy a car, you pay money to keep it running.

  • I wonder if the shift to smaller cars will raise premiums for life insurance. A follow-on article might also discuss the life long costs associated with recovering from an accident in a tin can, oops I mean, small car.