Jessica Sautter is a Content Writer for CarInsuranceCompanies.com with a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager

UPDATED: Sep 10, 2020

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Key InfoProvider Specifics
Year Founded2019 (Insurance vertical)
Current ExecutivesElon Musk (CEO)
Number of Employees40,000+
Headquarters LocationPalo Alto, California
Phone Number1-844-34-TESLA
WebsiteTesla.com
Best ForTesla owners
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Who could have expected that an automaker would make a foray into the auto insurance sector?

When it comes to Elon Musk, anything is possible. What’s different about Tesla insurance is their claim that — auto owners can save as much as 30 percent on premiums by buying insurance from them.

Tesla insurance has been rolled out for owners of Tesla cars only in California and since driving behavior can be recorded by Tesla cars, they believe that they would be able to offer discounted auto insurance for good driving behavior.

Tesla owners are definitely excited about getting cheaper car insurance but many industry experts aren’t hopeful about their success.

Warren Buffet, a well-known investor, made a remark about Tesla’s insurance at the Berkshire Hathway annual meeting. According to him, “the success of the auto companies getting into the insurance business is probably as likely as the success of the insurance companies getting into the auto business.”

Only time will tell if Tesla will make profits in the auto insurance market.

In 2017 it was reported that some companies were raising rates for Tesla vehicles, so this may be a way for Tesla to control engage with their clients through the entire experience similar to the way Apple does with their phones.

If you’re curious about what Tesla insurance offers or thinking about switching to their coverage program, read our guide to understand more about the coverage options.

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Table of Contents

Tesla Overview

The cost to insure a Tesla model is much higher than other cars because of the high repair cost, technology, and expensive parts which tends to raise the collision coverage premium.

As per data from the Insurance Institute for Highway Safety, Tesla’s Model S is amongst the top 25 most expensive cars to insure. That’s why Tesla has launched its own insurance coverage to offer cheaper coverage to consumers. But, will Tesla be able to handle the huge costs associated with claims?

Tesla’s Position for the Future

According to varied viewpoints, Tesla’s move to the insurance sector is part of its strategy to reduce the cost of ownership for consumers which the company has always struggled with. By tapping data from the AutoPilot driver-assist system, Tesla plans to reduce insurance rates for auto owners.

Tesla also believes that AutoPilot would reduce collisions as drivers will be more careful while driving when they get alerted by the system if they do something wrong.

In 2017, Tesla had partnered with Liberty Mutual to offer a new coverage program to their car owners, known as “InsureMyTesla.” However, premiums under this program ended up costing more for auto owners than competitors. Consumers also complained about the high prices charged by Liberty Mutual.

Whether this new car insurance program helps auto owners or not is yet to be seen, but if Tesla is able to offer auto insurance at a better rate than competitors, it can be a game-changer.

Tesla will need to offer a clear answer on some of the issues though:

  • As of now, their insurance coverage is available for auto owners in California only with no information about any intention to offer the coverage in other states. Car owners in other states are still paying high premiums for their Tesla cars and they might be looking forward to getting coverage directly from the automaker.
  • Tesla registered a net loss of $702.1 million in the first quarter of 2019 which means the company is strapped for cash. In the insurance business, companies need massive capital reserves to pay-off claims and Tesla might not be able to meet their insurance contractual obligations.

Telematics in Car Insurance

Although Tesla car insurance isn’t using your driving behavior data as of now, it’s expected to make use of telematics technology to calculate your insurance premiums.

Tesla already collects a lot of information about your vehicle and driving – such as your speed, mileage, braking, acceleration, whether autopilot is engaged or not, when you have your hands on the wheel, and much more. With the massive amount of data from their fleet, Tesla plans to build intelligent self-driving cars but the data can also help them in pricing policies and rewarding safe drivers.

That being said, it will take some time for Tesla to collect the driving behavior data and make patterns that will assist them in calculating discounted premiums. As of now, most companies offer discounts for auto owners to just sign up for their telematics program.

Nonetheless, Tesla envisions a discounted rate for its customers as they will save money on cheaper repair costs at Tesla auto care centers, autopilot features, and lower commissions.

Financial Strength Ratings of Tesla Insurance

Before buying auto insurance, consumers should always check the financial strength ratings from credit rating agencies to see if an insurance company has the ability to meet its long-term obligations.

Since Tesla insurance is new in the market, none of the agencies have assigned a rating to the provider. It’s recommended to assess ratings from a couple of agencies – such as A.M. Best, Fitch, Kroll Bond Rating Agency (KBRA), Moody’s and Standard & Poor’s – before signing a policy document.

Let’s understand why the financial strength of an insurer is important.

Online Presence of Tesla Insurance

Tesla has made a separate page for auto insurance on their website, however, it doesn’t offer much information to auto owners. Though there’s an option to get quotes, it’s directed to a page that asks users to call them for a quote.

Tesla also mentions on its website that auto owners can get buy a policy in less than a minute by connecting with their customer care.

Tesla auto insurance

Consumers have the option to call 1-844-34-TESLA to get a quote and discuss their insurance coverage needs.

Apart from a formal announcement on their website about the launch of Tesla insurance in August 2019, there hasn’t been much communication regarding the offerings or benefits.

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Tesla Car Insurance Rates

Car insurance rates are dependent on various factors – such as age, marital status, gender, driving record, etc. – so there aren’t any standard rates which can be quoted to everyone. Since Tesla is new in the auto insurance market, we have estimated the average rates that consumers can expect to pay for their coverage in each state.

StateAverage Car Insurance Annual PremiumTesla's Rate at 20% SavingsPotential Savings with Tesla Insurance
Alabama$3,566.96$2,853.57$713.39
Alaska$3,421.51$2,737.21$684.30
Arizona$3,770.97$3,016.78$754.19
Arkansas$4,124.98$3,299.98$825.00
California$3,688.93$2,951.14$737.79
Colorado$3,876.39$3,101.11$775.28
Connecticut$4,618.92$3,695.14$923.78
Delaware$5,986.32$4,789.06$1,197.26
District of Columbia$4,439.24$3,551.39$887.85
Florida$4,680.46$3,744.37$936.09
Georgia$4,966.83$3,973.46$993.37
Hawaii$2,555.64$2,044.51$511.13
Idaho$2,979.09$2,383.27$595.82
Illinois$3,305.48$2,644.38$661.10
Indiana$3,414.97$2,731.98$682.99
Iowa$2,981.28$2,385.02$596.26
Kansas$3,279.62$2,623.70$655.92
Kentucky$5,195.40$4,156.32$1,039.08
Louisiana$5,711.34$4,569.07$1,142.27
Maine$2,953.28$2,362.62$590.66
Maryland$4,582.70$3,666.16$916.54
Massachusetts$2,678.85$2,143.08$535.77
Median$3,660.89$2,928.71$732.18
Michigan$10,498.64$8,398.91$2,099.73
Minnesota$4,403.25$3,522.60$880.65
Mississippi$3,664.57$2,931.66$732.91
Missouri$3,328.93$2,663.14$665.79
Montana$3,220.84$2,576.67$644.17
Nebraska$3,283.68$2,626.94$656.74
Nevada$4,861.70$3,889.36$972.34
New Hampshire$3,151.77$2,521.42$630.35
New Jersey$5,515.21$4,412.17$1,103.04
New Mexico$3,463.64$2,770.91$692.73
New York$4,289.88$3,431.90$857.98
North Carolina$3,393.11$2,714.49$678.62
North Dakota$4,165.84$3,332.67$833.17
Ohio$2,709.71$2,167.77$541.94
Oklahoma$4,142.33$3,313.86$828.47
Oregon$3,467.77$2,774.22$693.55
Pennsylvania$4,034.50$3,227.60$806.90
Rhode Island$5,003.36$4,002.69$1,000.67
South Carolina$3,781.14$3,024.91$756.23
South Dakota$3,982.27$3,185.82$796.45
Tennessee$3,660.89$2,928.71$732.18
Texas$4,043.28$3,234.62$808.66
Utah$3,611.89$2,889.51$722.38
Vermont$3,234.13$2,587.30$646.83
Virginia$2,357.87$1,886.30$471.57
Washington$3,059.32$2,447.46$611.86
West Virginia$2,595.36$2,076.29$519.07
Wisconsin$3,606.06$2,884.85$721.21
Wyoming$3,200.08$2,560.06$640.02
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These rates are just an estimation of what auto owners might have to pay based on Tesla’s claim of a 20 percent reduction in prices. State averages are a good point to start if you want to see how much you can save with Tesla.

Another important thing to note here is that Tesla will not use individual data from vehicles, such as camera footage and GPS, to price its policies as of now. Their calculations are based on aggregated data about risks and their understanding of Tesla vehicles.

Tesla Car Insurance for Model S and Model X

We have done some comparisons and analysis on the current insurance premiums for Tesla Model S and X in two states – Maine and Louisiana. You can get an idea about how much Tesla owners pay for insurance at present.

StatesTesla Model STesla Model S Plan Options:Tesla Model XTesla Model X Plan Options:
Maine$37.67Basic: $14.68 + 5 months at $37.67
Pay in full: $181
Choice: $36.54 + 5 months at $92.30
Pay in full: $441
Rec: $38.02 + 5 months at $96
Pay in full: $456
Comp & Col: Basic none. Choice and Rec $500 deductible
$47.48Basic: $18.60 + 5 months at $47.48
Pay in full: $226
Choice: $32.09 + 5 months at $81.19
Pay in full: $386
Rec: $34.16 + 5 months at $86.37
Pay in full: $410
Comp & Col: Basic none. Choice and Rec $500 deductible
Louisiana$96.25Basic: $158.75 + 5 months at $96.25
Pay in full: $557
Choice: $405.25 + 5 months at $244.15 Pay in full: $1,426
Rec: $466.75 + 5 months at $281.05
Pay in full: $1,630
Comp & Col: Basic none. Choice and Rec $500 deductible
$125.95Basic: $208.25 + 5 months at $125.95
Pay in full: $724
Choice: $375.50 + 5 months at $226.30
Pay in full: $1,308
Rec: $461.50 + 5 months at $277.90
Pay in full: $1,594
Comp & Col: Basic none. Choice and Rec $500 deductible
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Tesla Car Insurance Rates vs Other Models

It’s no secret that Tesla cars can cost more to insure than some of the other luxury cars in the segment. Let’s look at the auto premiums for Tesla models as compared to BMW and Mercedez Benz.

Seeking Alpha conducted a study to compare the rates between nine Tesla, BMW, and Mercedez Benz models in different segments. The driver information, coverage level, and profiles to generate quotes were the same during the study.

  • As per their research, the median cost of insurance for Tesla M3 is considerably higher than BMW M3 and MB C-Class 43 AMG in Orlando, Florida. In Dallas and San Mateo, insurance premiums for Tesla are lower than the other two models.
  • Based on averages, Tesla M3’s insurance coverage costs 8 percent more than BMW M3 and 21 percent more than MB C-Class 43 AMG.
  • Among the full-sized sports car which is an extremely expensive segment, the Tesla Model S P100D is 10 percent more expensive than BMW M5 and 21 percent higher than MB E-Class 63 AMG-S.

Overall, the cost to insure a Tesla is 17 percent higher than the other two luxury cars, however, you must note that the Tesla models are 30 percent faster also which might impact the rates.

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Tesla Coverage Options

As of now, Tesla only offers auto insurance to customers in California. Since the company’s main focus is to reduce the cost of ownership for Tesla vehicles, it would operate in the auto insurance segment only.

Bundling Options and Discounts

As Tesla doesn’t offer any other types of insurance apart from car insurance, consumers will not get any bundling discounts. However, Tesla does offer multi-vehicle discounts and you can also multiple drivers on your policy.

As Tesla is a specialized auto insurance provider, you may not get the discounts offered by traditional insurance companies. But, your Tesla insurance would cost less because of the active safety and advanced driver assistance features in the cars that would prevent accidents.

Tesla offers different levels of autonomy in their cars and depending on how safe your particular models is, your rates would vary.

Autonomous LevelTitleDescription
Level 0 No AutomationThe driver performs all driving tasks
Level 1Driver AssistanceVehicle is controlled by the driver but some driving assist features may be included in the vehicle design.
Level 2Partial AutomationVehicle has combined automated functions, like acceleration and steering but the driver must remain engaged with the driving task and monitor the environment at all times
Level 3Conditional AutomationDriver is a necessity, but is not required to monitor the environment. The driver must be prepared to take control of the vehicle at all times with notice.
Level 4High AutomationThe vehicle is capable of performing all driving functions under certain conditions. The driver may have the option to control the vehicle.
Level 5Full AutomationThe vehicle is capable of performing all driving functions under all conditions. The driver may have the option to control the vehicle.
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What Stands Out, What’s Missing

If Tesla is able to reduce the cost for consumers, it would definitely be a unique proposition for consumers. But, after the debacle with Liberty Mutual, consumers might be a little skeptical about Tesla insurance.

The fact that it’s specifically targeted at Tesla owners gives them an advantage over other insurance companies since Tesla has first-hand data of its car’s technology and safety features. Also, Tesla’s Model 3 was recently awarded one of the safest cars so they might be able to prevent crashes and contain injuries that would lower down the coverage cost.

Tesla has launched its insurance program in partnership with State National Insurance Company which might assist the company in making the right decisions in the industry.

So, what’s missing that Tesla should work on?

As of now, nobody seems to have any data about how successful Tesla’s new venture would be as many insurers have tried to offer innovative solutions to reduce premiums and failed in the process.

Only time will tell if this new experiment from Tesla takes flight or not. But, there’s no doubt that electric vehicles and driverless technology have the potential to reduce the possibility of accidents.

Pros and Cons

Tesla insurance can make a huge difference in the cost of premiums for Tesla owners if it helps them save money as Tesla has first-hand knowledge about its vehicle technology and safety features. If they also tie-up with repair shops who would specialize in repairing Tesla models, it could lower down the claims cost as well.

Although we couldn’t find much information on their website about how this insurance would work, Tesla offers the option to call their customer service for any help or for getting quotes. As Tesla is well-known for its impeccable customer service, it might make a mark in the auto insurance sector where service matters.

ProsCons
Understanding of the unique needs of Tesla ownersOnly available in California
Strong history of customer satisfaction for vehicle ownersCan't get an online quote
Lower insurance costsInsufficient information about how to file a claim and other factors
Financial backing from Markel CorpLimited options to get discounts
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The main challenge for Tesla will be to handle claims as the company is already struggling with losses and a lower number of car sales. The cost to repair Tesla, even for minor fender benders, can run into thousands.

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FAQs

How can you speak to an agent about Tesla insurance?

As everything is in-house at Tesla for the moment, you can call their agent at 1-844-34-TESLA for any quotes or managing your policy.

Can you buy Tesla insurance for any Tesla model?

Tesla car insurance is available for owners of Model S, Model X, Model 3 and Roadster across California. The company plans to launch its car insurance in other U.S. states as well.

Will your driving behavior data be used to price insurance policy?

Contrary to popular belief, Tesla isn’t using individual driving behavior data from GPS or in-built cameras to calculate premiums. It rather uses aggregated data from varied factors and takes into account the driver assistance features to price policies.

How do you report a claim for Tesla insurance?

Customers are provided a number on their insurance card which they can call to report or manage a claim. A claims specialist will be assigned to the car owner who will offer assistance throughout the claims process.

If there’s a Tesla Body Repairs Center near your location, you will also get an assessment quickly and can interact with the adjuster on the estimated costs of repair.

Can you buy insurance from any provider if you own a Tesla?

Just because you own a Tesla doesn’t mean that you have to buy Tesla insurance as well. You are free to buy insurance from any provider that you prefer for your car.

Does Tesla offer ridesharing coverage as well?

As of now, Tesla insurance covers only the personal use of vehicles only and will not cover your car if it’s being used for ridesharing. They do have plans to offer commercial coverage in the future.

Can you get insurance for other vehicles with the Tesla policy?

Tesla is focusing on its own models at the moment because they are banking on their knowledge to offer better rates to consumers. They can help you to buy coverage for other cars through their network.

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References:

  1. https://www.tesla.com/support/insurance
  2. https://www.cnbc.com/2019/08/28/tesla-starts-selling-its-own-car-insurance-in-california.html
  3. https://www.autonews.com/finance-insurance/how-tesla-plans-cut-customers-insurance-costs-tap-autopilot
  4. https://www.insurancebusinessmag.com/us/news/breaking-news/why-teslas-insurance-bid-will-fail-166576.aspx
  5. https://www.iii.org/article/how-to-assess-the-financial-strength-of-an-insurance-company
  6. https://www.tesla.com/blog/introducing-tesla-insurance
  7. https://seekingalpha.com/article/4264983-tesla-cars-crazy-expensive-insure
  8. https://www.insurancebusinessmag.com/us/news/breaking-news/revealed-the-insurance-giant-partnering-with-tesla-166213.aspx?utm_source=Pinpointe&utm_medium=20190830&utm_campaign=WIBA-BreakingNews&utm_content=2ABC9DD0-8AA4-40DA-BDC3-D695D9F78F5A&tu=2ABC9DD0-8AA4-40DA-BDC3-D695D9F78F5A
  9. https://electrek.co/2018/09/11/tesla-in-house-body-repair-centers-reduce-repair-time/