Playing it smart: as small, fuel-efficient Smart Cars enter the U.S. market, insurers examine their loss experience and safety.

With gas prices reaching an all-time high and traffic congestion clogging many of the nation's highways, some U.S. drivers are making a "smart" choice when it comes to buying an automobile.

Fuel-efficient, gas-powered Smart Cars that are popular in Europe are now making their way into the United States. The three-cylinder engine cars that may get up to anywhere from 60 to 75 miles per gallon and hold two adult passengers are expected to cost, on average, between $15,000 and $ 25,000. In July, the cars made their debut into the U.S. market when ZAP (Zero Air Pollution) introduced its Smart Car Americanized after European manufacturer DaimlerChrysler halted plans to bring the vehicles to the United States. ZAP's initial model is the first of several new models the Santa Rosa, Calif.-based company intends to introduce and offer through its distribution networks. ZAP has a 10-year license on the technology developed by Smart-Automobile LLC to Americanize the Smart Car for the U.S. marketplace. As of early September, ZAP had sold two cars to U.S. consumers.

As auto insurers anticipate coverage of the new vehicles, lack of claims experience makes rating difficult."We use a make-and-model rating system to rate cars according to claims experience, but because Smart Cars are so few and far between at this poInt, we don't have a credible amount of claims experience with which to do that" said Dick Luedke, a spokesman for State Farm. "Rating cars for physical damage coverages is primarily based on their cost." Cars for which State Farm doesn't have enough claims experience are placed "in the middle," said Luedke, "and we assume they are average until we learn otherwise."

Looking outside the U.S. market, Emile Abu-Shakra, a spokesman for Lloyds TSB in London, said Smart Car drivers are entitled to the same benefits as other car drivers in Britain.

Zurich Financial Service Group also has experience with insuring Smart Cars outside the United States. "We had an innovative program where insurance was included with the vehicle, and some vehicles even had some Zurich branding on them during the early introduction of the cars in Switzerland" said Kevin Kelso, president of personal lines for Farmers Insurance, an affiliate of Zurich Financial Services.

Kelso said frequency of loss has remained relatively stable, with only a slight increase of loss in Switzerland--"probably due to the very dense urban environments they are being driven in," he said. He added that performance of Smart Cars also has fared well in Germany. Research indicates the vehicles gained popularity since their introduction in the country in the mid-1990s. "It doesn't seem to me based on our European experience that Farmers would have any reservations about insuring these cars when they are marketed in the U.S." said Kelso. "We will want to charge the right price, of course."

One question insurers likely will have concerns the Smart Car's safety. But Alex Campbell, a ZAP spokesman, said there's little cause for alarm. "The Smart Car is probably one of the safest cars on the road today because of all the features designed into it and the pure physics of the car" The cars have passed U.S. Department of Transportation crash certification, and Campbell said their reinforced construction is similar to that of safety cages found in race cars. In addition, Smart Cars don't have crumple zones like most traditional models, which allows them to "hold their shape like a ball or nut," and they have other safety features such as skid control, anti-lock brakes and raised seat position. "They're designed in a different way with the use of lightweight materials and construction. Basically, when it comes to safety, the cars are just smarter" said Campbell.