What is Tesla’s New Car Insurance Program?

November 6, 2019

Tesla offers its own insurance program now for drivers in California. They claim it saves drivers up to 30 percent on insurance premiums. Is it all that it’s cracked up to be? Should you consider it or stick with your traditional auto insurance?

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We explore the answers below.

Is the Tesla Expensive to Insure?

Historically, the Tesla is more expensive to insure than many other cars. Many drivers see premiums of $2,000 or more per year. The exact cost depends on the model and trim. Your driving record and location also plays a role, as does the amount of chosen coverage.

In general, though, yes the Tesla is more expensive to insure. That’s why Tesla came out with their own program to help drivers save money. The program started in Hong Kong and Australia. It is slowly making its way to the United States as more people use it.

Why Tesla Offers Insurance

Tesla claims they offer lower rates because they know the car brand the best. They know the safety mechanisms and advanced technology offered. In other words, they have inside information regarding the cost of claims involving the Tesla. They also have the data necessary to track driving habits and provide proper premiums.

The Tesla has many driver assistance features that help keep drivers safer than your standard car. Safety features help lower the risk of a claim. Insurance companies like lower claim risks; they usually result in lower premiums.

What Models is Tesla Insurance For?

Tesla offers its insurance on the following models:

  • Model S
  • Model X
  • Model 3
  • Roadster

Again, they only offer the insurance to residents of California, but plan to expand coverage throughout the United States in the near future.

The Advantages of Tesla Insurance

Tesla insurance has a couple of advantages including:

  • Tesla has the necessary data – Tesla cars include sensors that provide Tesla with the data necessary to provide accurate car insurance premium quotes. The data-driven premiums can be lower for ‘good drivers’ and higher for the ‘riskier drivers.’
  • The lower premiums make the Tesla more affordable – The Tesla itself isn’t that expensive. When you pair it with astronomical insurance premiums, though, it is expensive. Tesla insurance helps keep the costs down, making it easier to afford a Tesla.
  • Insurance that covers what you need – Tesla knows its vehicles and what needs coverage. They know what my break, need repairs, or put the car at risk of damage. The insurance covers these needs accordingly.

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The Downsides of Tesla Insurance

Aside from the fact that Tesla insurance is brand new, there is another big downside – a lack of bundling. If you have multiple cars, a home, or life insurance, you may get a bundling discount from your current provider.

If you pull your Tesla from that bundle, you may lose the discount. Tesla claims it offers insurance for other cars and drivers, but the savings are yet to be determined. It’s important to compare policies with both your current insurance provider with the bundled discount and the Tesla insurance to see if you come out ahead.

Tesla insurance’s algorithm also doesn’t take into consideration certain data from your vehicle. For example, video cameras often decrease premiums because cameras deter theft. Tesla insurance doesn’t use that as a part of the process whendetermining premiums.

Is Insurance More Expensive for Electric Cars?

Being electric is one of the many reasons Tesla insurance is more expensive. While they save on fuel costs, electric cars are more expensive to repair. A claim on a Tesla typically costs much more than a claim on a non-electric vehicle.

Tesla insurance is still new and consumers are testing the waters. Is it worth getting a quote? Absolute – it costs nothing. Make sure you carefully compare it to your other insurance options though. Make sure you have proper coverage at premiums you can afford.

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