Honda Offers Free Insurance

In an attempt to lure buyers to its first electric vehicle, the automaker throws in free, no-deductible collision insurance.

If the thought of free car insurance gets you excited, Honda has a deal for you: free collision insurance. Notice we said "free" and not "stipulation-free" -- the deal is applicable only under certain conditions. That is, if you're in the market for an electric vehicle; you live in California or Oregon; you want to lease instead of buy; you can afford payments of $389 per month; and you don't care to purchase the car at the end of the three-year lease. Still interested? 

Yes, the free insurance deal is available only for Honda's Fit EV, which also comes with all of the above caveats. Honda is hoping the allure of free insurance for the duration of its three-year leases will draw buyers in. 

It's a marketing tactic to get drivers into the car, of course, but Honda says it's also a practical move. According to reporting by The Detroit News, the fact that only 1,100 vehicles are poised to hit the streets this year could have given pause to insurers attempting to rate the financial risk of such a low-volume vehicle. The insurance freebie gets around that possible snafu.

Is this likely to catch on within the industry? General Motors offered a year of free insurance to drivers in Washington and Oregon last year, but didn't subsequently renew or expand the program. The problem: It was difficult to administer. 

But with such low volume -- just 1,100 cars total -- administrative logistics are likely to be minimal for Honda with the Fit EV. And for drivers of the new, unproven vehicle, the added assurance of complimentary insurance, maintenance and roadside assistance could make the difference -- along with the financial break, which comes to an estimated $600 per year. 

Fit EV drivers will still have to pay for their own liability insurance. According to Jerry Hirsch of The Detroit News: "Consumers leasing the Fit will be required to carry liability insurance at $100,000 per incident and $300,000 overall coverage."

Courtesy of MSN