Tesla to Launch Its Own Insurance Program Next Month

Apr 24, 2019   

Per today’s earnings call, Tesla is planning to launch its own in-house insurance program next month.

Tesla had been planning to launch its own insurance/maintenance program for some time and bundle it with their cars at time of purchase. While it isn’t clear whether that will be the case here, it is expected to be a first-party offering unlike the current program InsureMyTesla which is offered in partnership with Liberty Mutual.

The company has already been providing insurers with information from its driver assistance technologies that do lower rates; however, many Tesla owners report higher-than-average rates particularly in high-demand states like California — which is likely also contributed to by costly claims due to the expensive repairs needed on parts that contain sensors/cameras.

It is important to note that Tesla currently offers an insurance program designed around its own terms backed by third party insurance companies called InsureMyTesla, which is a much more compelling offering internationally in Australia and Hong Kong with benefits including reduced rates, a new Tesla replacement if a car is totaled within a 2-3 year period, and Tesla rental vehicles. In fact, Tesla had been selling the majority of its vehicles with InsureMyTesla in those territories financed over a three-year period. Currently, it appears the company has removed any mention of InsureMyTesla from its site to make room for its new offering. Elon has said that its new insurance program “will be much more compelling than anything out there.”

A Tesla driving on Autopilot is over 6x less likely to crash than a typical vehicle, and even when driven manually is nearly 4x less likely to get into a collision than any other type of vehicle on U.S. roads. This statistic alone should lead directly to lower rates, and while some insurers are beginning to provide discounts designed for technologies like automatic emergency braking the effect on rates has been more minimal than the data would imply.

The new program should recognize the safety and advanced driver assistance technologies found in a Tesla and provide reduced rates as well as exclusive benefits tailored around Tesla ownership as a result.

Real Talk

Considering the unusually high rates for Tesla’s offered through many insurers in some areas, Tesla has a lot of potential here to lower the cost of ownership of its vehicles by taking into account the safety features on its cars which dramatically reduce the risk of collisions. A new insurance program also paves the way for full self-driving to become a reality, as automakers will be liable for a vehicle operating in true level 5 autonomy without a driver.

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