A Peek Into Tesla’s Auto Insurance

In August 2019, Tesla started offering their own car insurance product in California. The initiative was announced by Tesla CEO Elon Musk in an earnings meeting back in April of 2019. The company started its own insurance firm, Tesla Insurance, for this purpose. As of November 2023, Tesla Insurance is now available in 12 states across the US. 

The company had previously teamed up with third-party insurers under its Insure My Tesla program, to offer insurance facilities to Tesla owners. Owing to the high cost of Tesla vehicles and parts, it is comparatively more expensive to insure a Tesla compared to other cars. This is largely due to the high costs of repair, should a collision occur.

Pros and Cons of Tesla Insurance Policy

Tesla offers insurance at a discount ranging from 20 to 30 percent for the benefit of Tesla drivers. Tesla car owners can get a quote within minutes, and those who order cars will be able to request a quote with their vehicle identification number. The insurance rate depends on the exact Tesla model, driving history, location, and the type of coverage chosen. The typical rate of insurance is $2.030 per year across all Tesla models which is 49% less than the average rate. 

Unfortunately, some Tesla insurance holders are struggling to get claims approved and expenses covered. In 2023, one man suffered serious injuries from a car accident caused by Tesla’s autopilot system. As of early 2024, he is still struggling to get his expenses covered by Tesla insurance. As he waits for a promised call back from Tesla, his medical expenses have climbed to $50,000. This defeats one of the main purposes of insurance – to cover medical care after a car accident.

The Importance of Safety Scores

Safety scores work like credit scores to lower your insurance rates. Tesla sets a safety score to allow savings for customers. It does not consider factors like accident history, speeding tickets, previous insurance claims, age, gender, credit scores, and marital status when setting the rates for car insurance. However, since Tesla offers coverage to only some non-Tesla cars, this could mean that you have to use two or more car insurance companies if you are a multi-car household. So you would have to sign up with multiple insurance firms and won’t be able to get a multi-car discount at a single insurance firm. 

A safety score of 100, which is considered perfect, will get you an annual rate of just $883 on a Model 3, compared to an overall average of $3,386 per year. A score of between 95 and 99 will give you an annual rate of $1,040 per year. Although Tesla’s insurance rates in California are not based on the Safety Score, the average price is $2,246 per year across all Tesla models, as much as 45% less than the state average.

The Tesla Safety Score is impacted by forward collision warnings, hard braking, aggressive turning, unsafe following, and force autopilot disengagement. 

What Makes Teslas Expensive to Insure?

The following factors make Tesla cars more expensive to insure than others:

  1. Teslas can only be repaired at Tesla-approved body repair shops. The training and equipment to become qualified means much higher costs for drivers.
  2. Electric cars are more expensive to repair and insure because they have more expensive equipment and technology.
  3. Teslas have a higher battery range than other EVs, so they tend to rack up more miles. More driving time means higher crash risks.
  4. The Model S aluminum frame is more expensive and difficult to repair than a steel frame.
  5. That’s why the cost to repair a Tesla, even for a minor fender bender, can easily reach several thousand dollars. As the cars include more custom parts, safety features and technology, the cost per collision may continue to rise.
  6. Though autopilot technology built into Tesla cars aims to reduce crashes, quotes for a Tesla also factor in the cost of replacing all that high-end tech after a crash.

Due to these factors, it does seem to make sense to keep all Tesla-related expenses in the family. However, it’s still worth shopping around and considering quotes from other companies.

Considerations for Tesla Owners

Tesla has its own insurance program for the benefit of its drivers, and also covers insurance on some non-Tesla cars. But is it worth it? Ultimately, the decision of whether to choose Tesla Insurance or another provider depends on individual needs and priorities.

Factors such as individual driving history, location, desired coverage options, and price should all be weighed carefully. Tesla Insurance might offer the convenience of streamlined coverage and potential cost savings for owners, but can such a new company provide the service you need in an emergency? Make sure to read online reviews and compare quotes from other reputable insurers to get a broader perspective and ensure the best fit for your circumstances.

Author: Brandon Park