Saturday, May 4, 2013

Will Insurance Premiums be Impacted by the New Tucson ix SUV?

Carmaker Hyundai recently announced the mass production of the Tucson ix SUV, a hydrogen powered car. The vehicle is initially being sold to fleet and corporate buyers, but Hyundai are hoping to have sold 1,000 models by 2015, by which time the price of the car will have dropped from about $200,000 to $50,000. 

The Tucson ix SUV can deliver a 370 mile range between refuelling, and is being promoted as a breakthrough in terms of hydrogen cars, which have zero emissions. However, will the Tucson ix SUV have an impact on insurance premiums? 

Whether or not the Tucson ix SUV, and hydrogen cars more generally, have an effect on insurance premiums will depend on the slow roll out of the model; the niche ownership and high cost of the car mean that it will be unlikely that most people’s insurance will go up as a result of average changes. 

For those that do own a hydrogen car like the Tucson ix SUV, though, they can expect high premiums due to the cost of replacing engine parts.

Again, however, it’s unlikely that insurance premiums will be affected by the launch of the Tucson, in the sense that there will only be so many of them on the road. 

It’s more likely that insurance premiums will have to adjust in two or three years time, when companies like BMW, Daimler, and Toyota begin to scale out their own, potentially consumer ready hydrogen cars - the more hydrogen cars that are being made, the greater the chance that there will be a split with current insurance costs.

It’s difficult to tell whether insurance companies will weigh up the environmental benefits of hydrogen cars, and decide to offset this against the high costs of purchase and fuel cell replacements. 

The lack of fuelling stations for hydrogen cars, at least for the moment, also means that hydrogen powered cars might be viewed by insurers as having a higher risk for breakdown and recovery services, which will further add to their premiums.
English: Honda FCX
English: Honda FCX (Photo credit: Wikipedia)

Moreover, hydrogen powered cars still carry some extra risk for insurers due to their compressed gas tanks, which could cause serious damage in the event of an explosion. 

Manufacturers like Hyundai are working on improving this problem through solid state and cryogenic systems, as well as through safety devices that shut down fuel cells and tanks before a collision, and vent gas upwards and away from a vehicle.

The impact of hydrogen powered cars such as the Tucson ix SUV on insurance premiums can also be viewed alongside the kinds of policies created for other alternative fuel cars and hybrids; in most cases, hybrid cars are more expensive to insure, as parts tend to be costly to replace, and the initial value of a vehicle higher than others in the same size bracket. 

Electric cars also get affected by high premiums for the same reasons, although some insurance companies do provide reduced premiums as the result of viewing electric car drivers as being generally slower on the road and more attentive to other drivers.


Author Bio: 
Lisa jane, an insurance expert from Berlin currently based in Sham Tseng, Hong Kong. She writes primarily for insurance based online publications but has been know to divert into other areas of finance. For Hong Kong car insurance she recommends DirectAsia.


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