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Tesla Insurance Review

Updated Nov 15, 2022
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Tesla’s car insurance uses real-time data from its vehicles to produce a car insurance rate unique to you. However, the product is relatively new and coverage offerings may be more limited than if you were to insure your Tesla with a larger insurance company.

Pros

  • Tailored to the needs of electric vehicle drivers
  • May use driving data directly from Teslas to offer a discount
  • Several optional coverage types available

Cons

  • Limited state availability
  • Only sells car insurance, so no bundling is available
  • No third-party ratings
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Tesla cars are some of the safest vehicles on the road today, so you might think that insuring them would be inexpensive and easy. However, many Tesla owners claim the opposite to be true, with the average owner potentially paying thousands of dollars more to insure their electric vehicle (EV) than gas-vehicle drivers. Vehicle-specific rates include repair costs and replacement costs, which are quite expensive compared to other types of vehicles with easily accessible and less expensive parts.

Fortunately, there is a new company writing policies specifically for Tesla vehicles and it can save customers 20-30% on coverage. The company is brought to you by Tesla. In order to provide more value for Tesla owners, Elon Musk created Tesla Insurance Services to write policies that are specifically created for Tesla vehicle owners. With the best knowledge of these EV models and owners specific insurance policy needs, who better to create insurance for them?

What is Tesla Insurance?

According to an article in Insurance Business journal, Musk launched Tesla Insurance in August 2019, in response to owner complaints about high insurance premiums through various insurance providers. Previously, Musk had partnered with Liberty Mutual Insurance to offer policies geared toward Tesla vehicle owners — a program he called InsureMyTesla. The premium rates were supposed to take into account the admirable safety features that the company built into the cars.

But this initial effort did not work well enough for Musk, so he decided to take control and provide what he said would be a “much more compelling” insurance option. This time, he kept the program in-house, but formed a relationship with State National Insurance Company, a subsidiary of specialty insurer Markel Corporation.

The current Tesla Insurance policy offering is currently available in Arizona, California, Illinois, Ohio and Texas, with future expansion expected in more states. In Texas and Illinois, Tesla has partnered with insurance underwriters, Redpoint County Mutual Insurance Company and Midvale Indemnity Company, respectively. The Tesla website says it is possible to purchase a policy in “as little as one minute” for qualified owners of the company’s cars, which includes the Model S, Model 3 and Model X, as well as the Cybertruck and the company’s first car, the Roadster.

The Tesla Insurance program, despite being the product of an iconoclastic car company, is similar in many respects to conventional insurance. It is usually purchased online, and features standard liability coverage, comprehensive and collision, MedPay and uninsured/underinsured motorist coverage.

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How much does Tesla Insurance cost?

Since Tesla car insurance has only been in the market since 2019, it is difficult to come up with any “big picture” sense of how expensive the insurance is. According to Musk, Tesla Insurance is 20-30% cheaper than comparable insurance from other carriers.

One needs to be a Tesla owner to receive a specific quote for insurance, but our research indicates that standard coverage for a Model 3 for a 30-year-old driver with a good driving record is roughly $3,000 — considerably less than the average, which is nearly $4,500.

Keep in mind that your own insurance policy costs may be different, since factors from your age and marital status to the age of the car, your driving history, and any previous infractions all play a role in determining premium prices.

You might think that if Teslas are as safe as they say they are, that costs will be even lower. Safe cars, after all, generally mean less accidents, which translates into fewer claims. However, what makes Tesla Insurance so expensive, is the fact that the cars have high repair costs when they do have accidents, a key factor used by insurance providers to determine specific make and model rates.

The body of a Tesla, for example, is aluminum, rather than the steel used in most cars. Many repair shops are not set up to work with aluminum body panels, or if they are, they are more expensive. Teslas also include a great deal of technology that is both difficult to fix and pricey. According to Tesla’s Texas filing, the company also plans to provide parts to certified repair shops at a discounted rate — tentatively set at 15%. This will allow customers to gain access to a network of mechanics that are most capable of providing the solutions they need when something goes wrong with their EV.

Another silver lining for Tesla Insurance is the fact that the company recently announced that it will honor up to a 70% discount on insurance premiums based on driving data collected from the vehicles. Tesla will use key performance indicators such as the number of times the lane departure warning is triggered or the typical following distance a driver uses to determine how significant each customer’s savings will be. This program is similar to Progressive’s Snapshot program that provides personalized insurance rates based on how policyholders drive.

Drivers can choose to opt out of this data-sharing discount; however, they will automatically be placed in the worst category for eligible savings.

How does Tesla Insurance compare to other auto insurance companies?

Tesla Insurance Services offers standard insurance offering coverages for vehicle owners; the types of coverage you will find with any auto insurance provider. These include:

Tesla also offers special liability coverage, called the Vehicle Automation Package, for when your car is operating in autonomous mode. This package includes insurance offerings like autonomous vehicle liability, cyber identity theft, wall charger coverage and electronic key replacement. These are unique to Tesla and not often seen with other insurance providers.

Optional coverages available from Tesla also echo those found at other companies, including roadside assistance coverage, a waiver on the deductible if the car is totaled, and gap coverage, which pays off your loan if your car is stolen or totaled.

Tesla is not known for discounts, but there are several in addition to the autopilot discount that are comparable to what you would find with other insurers to bring down your insurance policy costs. These include having more than one car insured with the company, a good driver discount, loyalty discount and driver education course discount. Additionally, the aforementioned 70% discount program may provide the most savings to customers who choose to share their driving behavior data with the company.

As far as Tesla’s pricing goes, it might not necessarily be the cheapest option for insuring your Tesla, but they are at the lower end, coming in at roughly $1,000 less a year than some larger carriers. Tesla vehicle owners can now include non-Tesla vehicles on their insurance policy as well.

However, insurance expert Laura Adams advises getting quotes from several companies before making your decision – even for a Tesla. “If you are in the market for a Tesla,” she says, “it is wise to shop and compare rates from multiple insurers, so you get the best insurance.”

Is Tesla Insurance worth it?

If you own a Tesla, it is worth getting a quote from the company. But do not stop there: Check out several other companies for quotes as well, so that you have a range of options. Although Tesla Insurance may not be the cheapest option for all drivers, it is tailored specifically for Tesla vehicles, which means you are more likely to get service from professionals who understand the specific needs of these vehicles.

Especially as Tesla broadens its network to include repair professionals, it may be worth the cost of insurance through the automotive manufacturer despite having a slightly higher price point than the likes of some other national carriers. Additionally, drivers who allow their data to be shared with the company could save up to 70% on insurance premiums, easily making Tesla Insurance more affordable when your driving is considered the safest in Tesla’s 10-bucket driver class system.

The jury is still out on whether Tesla’s new insurance initiative will be successful, and if it truly is the best insurance for Tesla cars. Critics argue that just because the company knows its cars well, does not mean that they understand the insurance business. The fact that Tesla is partnering with industry giant Markel is a good sign, since Markel brings a wealth of insurance knowledge to the table.

Frequently asked questions

Why are Teslas so expensive to insure?

Teslas are not cheap cars, with the Model 3 starting around $45,000 to the Model S Plaid beginning at $130,000. Factors used to determine insurance rates include repair costs, which is one of the reasons Teslas can be expensive to insure. Teslas have high-end electronics and pricey aluminum bodies, so insurers must take that into consideration when setting rates.

Where is Tesla Insurance available?

As of March 2022, Tesla Insurance is available in Arizona, California, Illinois, Ohio and Texas. But the insurance provider is expecting to expand to more U.S. states in the near future.

Does Tesla Insurance offer anything that other companies do not?

Tesla Insurance policy offerings are similar to those offered by other insurance providers. But Tesla does have options that are specific to Tesla cars, such as cyber fraud expense, autonomous liability and coverage for electronic key replacement and wall chargers. The company bases premiums on a vehicle’s Safety Score, which means the premium could change from month-to-month, while other companies using driver analytics tend to only change the premium at each renewal.

Does Tesla Insurance vary based on model?

Yes, just like other insurance companies that determine risk based on vehicle information, Tesla tailors its premiums based on the specific model the driver wishes to insure. Currently, Tesla offers insurance to all Model S, Model X, Model Y, and Roadster vehicle owners.

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