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| Elon Musk also pays for car insurance: Should you ask Tesla to insure your car? | Gadgets 36T |
As with the
electric car industry, Elon Musk intends to revolutionize auto insurance by
promising drivers’ premium discounts of up to 60%.
Tesla Insurance
launched in Colorado, Oregon and Virginia this month after rolling out its
services in Texas, Illinois, Arizona, Ohio and (to a limited extent)
California. The
company, which
hopes to expand to most other states this year and internationally in the
future, says its customers are now free about their credit score, age, sex and
even gender.
As tempting as
it sounds, Tesla insurance may not be the ideal option for everyone, if it is
an option at all.
Do you belong
to a club?
Since its
inception, Tesla Insurance has only been available to Tesla car owners, and
there are no plans to change that.
says the reason
it offers lower fares in the first place is because it has an "excellent
understanding of its vehicles" and their "technology, safety and
repair costs."
If you don't
have a Model S, Model X, Model 3, or Model Y, you'll have to look elsewhere to
find a great discount on auto insurance.
And while Musk
plans to someday offer domestic global coverage, you might have to wait a bit
depending on where you live.
"The
regulatory process for approving insurance business is extremely slow and
complex and varies greatly from state to state," he tweeted last year.
Why switch to
Tesla Insurance
Electric cars
typically cost more to repair or replace than their gas-powered counterparts,
and as luxury EVs, Tesla’s can be even more expensive.
Motor trend
looked at how much it would cost each year to insure the various models from a
traditional provider. These averages assume, among other things, that the owner
is a 40-year-old single male with a clean criminal record and good credit:
- Tesla Model 3: $2,114 - $2,351
- Tesla Model S: $3,673 - $4,143
- Tesla Model Y: $2,118 - $2,227
- Tesla Model X: $3,355 - $4,025
The average
driver could save 20% to 40% by switching, Tesla says, while some drivers could
save 30% to 60%.
The company
says it can charge less because it trusts its cars' advanced safety features
and the driving data it collects directly from your vehicle.
"Tesla
uses certain in-vehicle functions to estimate rewards based on actual
driving," Tesla's statement said. "They make monthly payments based on
driving style rather than traditional factors like credit score, age, gender,
claims history and driving history used by other insurers."
That's a big
change. While many other insurers offer discounts if you install a tracker and
drive safely, they typically use that data along with your credit score, claims
history, and other factors to determine rates. Finally, being held accountable
for your behavior can force you to drive more carefully, even if it means
getting to your destination a little slower.
"Getting
real-time feedback on driving habits allows Tesla owners to drive their cars
more safely because they can see... 'Okay, whether or not this will affect my
insurance rate,'" Musk said in a call to April -Revenue.
Why Some Are
Canceling Tesla Insurance
Speed demons
who don't want to switch may not like their insurer knowing how they actually
behave behind the wheel, especially if they've had a good driving record or
enjoyed excellent credit.
Some drivers
also choose not to install tracking devices for privacy reasons, in which case
it should be noted that the technology required to use Tesla Insurance is
already installed in Tesla vehicles.
And while the
company is keen to use the data in most states where it does business,
California law prohibits insurers from using behavior-tracking technology to set
insurance rates.
“We want real-time
insurance, where insurance costs are based on actual driving history, which is the
way to go”; Musk said at a shareholder meeting last year. "So, we're
trying to get permission from regulators."
Tesla does not
currently use data from individual cars in California, instead relying on
anonymous information collected from a variety of drivers. That means a Model
Tesla driver in Cali pays the same fare as a daredevil who corners and brakes
at the last minute, assuming no one is involved in an accident. Golden State
Tesla owners
would do well to compare quotes from multiple companies to ensure Tesla
Insurance is always offering the best rate.
