Can you beat the carbon tax with car insurance?

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When it comes to car insurance, price tends to be one of the main factors we consider when comparing cover. But if making your car carbon neutral matters to you, your choice of insurer can make a difference.

Cars are a leading source of greenhouse gas emissions in Australia. Government figures show for every litre of petrol consumed, around 2.3 kilograms of carbon dioxide (CO2) is released into the atmosphere. As a nation, our cars collectively churn out about 40 million tonnes of CO2 each year.

It's not just bad news for the environment. The insurance industry stands to be hard hit by climate change if sea levels rise or natural disasters become more frequent. Not surprisingly, many insurance companies are doing their bit to reduce emissions through innovative policies.

Like some carbon offsets with your cover?

Leading the charge is IBuyEco, a relative newcomer to the Australian market, offering what it describes as '100 percent carbon neutral' car insurance.

Put simply, IBuyEco partners with Greening Australia, using part of your car cover premiums to fund tree planting projects that offset 100 percent of your car's annual carbon emissions. As part of your policy you'll be asked how many kilometres the car travels each year in order to calculate its CO2 emissions – and your premium.

Bear in mind, it's possible to independently arrange carbon offsets for your car through eco-charities like Greenfleet. A donation of $56.95 will see 17 trees planted to offset 4.3 tonnes of vehicle carbon emissions. Donations are tax deductible. 

Discounts for sippers not guzzlers

Other insurers are taking steps towards green car cover. The NRMA offers a 10 percent discount on comprehensive premiums for fuel efficient vehicles using less than 5.5 litres per 100 km. The surprisingly long list of eligible cars includes the Ford Fiesta and Focus, the Honda Civic and a couple of Volkswagens.

How does your insurer shape up?

If you'd like to turbo-charge your green commitment, it's worth checking to see what your insurer is doing to reduce its own corporate eco-footprint.

The RACV for instance is behind the Low Emission Vehicle (LEV) Automotive Partnership, which produces the Green Wheels Buyers Guide ( helping drivers to select low emission vehicles.

Adding to its green credentials, the NRMA claims to have saved over 30 percent of its own carbon emissions by switching to LPG for its roadside assistance fleet.

Reduce your emissions

Along with offsetting your emissions and dealing with an environmentally aware insurer, a few simple steps can reduce your car's greenhouse impact. Leave the car at home and use pedal power or simply walk to nearby destinations. Think about car-pooling or using public transport. And have your car serviced regularly to improve its efficiency – and lifespan.

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