Auto Insurance For Tesla: How Much Does It Cost?

Tesla insurance costs vary depending on several factors, including the model, location, driving record, age, and insurance provider. On average, insuring a Tesla can be more expensive than insuring a similar-sized car, such as a Toyota Camry, due to the higher cost of repairs. However, some Tesla owners have reported insurance costs that are similar or only slightly higher than those of other vehicles. It is recommended to shop around and compare quotes from different insurance providers to find the best rates.

Tesla's own insurance rates

Tesla offers its own insurance, which is available to Tesla owners in 11 or 12 states. The rates are very competitive for good drivers, with the average cost of car insurance for a Tesla being $3,947 per year, or $329 per month. Tesla sets prices primarily using sensors onboard your Tesla, and ignores things like credit score, speeding tickets or claim history. This means your rates can change a lot from month to month depending on your driving behaviour.

Tesla's insurance rates are very affordable for nearly all drivers, and your rate drops even more if you have a high safety score. A perfect score of 100 will get you a monthly rate of just $74 on a new Model 3. That's shockingly low compared to the overall average of $282 per month.

Tesla's exclusive use of its onboard sensors means that a single incident, even if it's not your fault, can impact your rates. Customers have reported another driver unexpectedly pulling in front of them, leading to price increases of $10 or more for the next month's premium.

Tesla Insurance also gets a lot of complaints from its customers, suggesting drivers are often unhappy with the service they receive.

The cost of Tesla insurance varies based on which model you have:

• The Model Y is the cheapest to insure, with an average rate of $255 per month.
• The Model 3 is slightly more expensive, with an average rate of $282 per month for the newest base model.
• The Model S is the most expensive to insure, with an average rate of $413 per month for the base model.
• The Model X costs an average of $356 per month to insure.

Compared to the average cost of car insurance for a 3-year-old Toyota Camry, which is $1,765, insurance for a Tesla is significantly more expensive.

How Tesla's Safety Score works

Tesla's Safety Score is an assessment of your driving performance based on certain metrics that the company calls "safety factors". The score is meant to estimate the likelihood of a driver being involved in a future collision, with drivers who have higher safety ratings being less prone to crashes and vice versa. Each driver is rated on a scale of 0 to 100.

The Safety Score is calculated by combining the daily Safety Score for a maximum of 30 days. The score is then displayed on the main Safety Score screen in the Tesla app.

The daily score is calculated using a formula for Predicted Collision Frequency (PCF). This predicts how many collisions you’ll face per one million miles driven and is based on statistical modelling that uses nearly 30 billion miles of fleet data. The PCF is then converted to the Safety Score that you see by using a specific formula.

The following safety factors are included in your score:

• Forward collision warnings: Your Tesla will alert you when you might collide with an object ahead of you.
• Hard braking: Backward acceleration measured by your Tesla in excess of 0.3g, the same as a decrease in vehicle speed greater than 6.7 mph per second.
• Aggressive turning: Left or right acceleration measured by your Tesla in excess of 0.4g, the same as an increase in vehicle speed greater than 8.9 mph per second to the left or right.
• Unsafe following: The proportion of time when your vehicle's headway is less than one second relative to the time that your vehicle's headway is less than three seconds. It's only measured when traveling at least 50 mph.
• Forced Autopilot disengagement: Your Tesla's Autopilot automatically disengages after three warnings. If this happens to you while driving, it impacts your Safety Score.
• Late-night driving: The amount of time you drive between 10 pm and 4 am divided by the total time you spend driving.
• Unbuckled driving: The proportion of time spent driving over 10 mph without a seatbelt on.
• Excessive speeding: The proportion of time spent driving over 85 mph as a percentage of the total time spent driving.

These are measured directly by your Tesla using various sensors on the car and the Autopilot software.

Why Teslas are expensive to insure

There are several reasons why Teslas are expensive to insure. Here are some of the key factors:

High Repair Costs

The cost of repairing a Tesla after an accident can be significantly higher than that of other vehicles. This is due to the complex electrical and mechanical systems in Teslas, as well as the limited availability of Tesla-certified repair shops and replacement parts. As a result, insurance companies often have to pay out more for repairs, which leads to higher premiums for Tesla owners.

Expensive Replacement Parts

Tesla vehicles are equipped with advanced technology and high-end components, which can be very expensive to replace. The battery, for example, cannot be repaired and must be replaced if damaged, often leading to a total loss for the vehicle. This increases the financial risk for insurance companies, resulting in higher insurance rates for Tesla owners.

High Accident Rates

According to reports from the Highway Loss Data Institute (HLDI), Tesla owners are more likely than the average driver to be involved in an accident. This could be due to a variety of factors, including driver behaviour, vehicle performance, and safety features. Regardless, the higher accident rate contributes to the increased cost of insuring a Tesla.

Limited Driving Data

Tesla Insurance, the company's in-house insurance option, uses real-time driving data to calculate premiums. This data is collected through the vehicle's built-in technology, including safety features and driving assistance systems. While this can lead to lower rates for safe drivers, it can also result in higher rates for those who exhibit risky driving behaviours, such as hard braking, aggressive turning, and unsafe following distances.

Limited Availability of Insurance Options

Tesla Insurance is currently only available in a limited number of states, and even within those states, the rates can vary significantly. Additionally, some insurance companies have pulled out of certain states, reducing the number of options available to Tesla owners. This limited availability can drive up the cost of insurance for Tesla vehicles.

High Vehicle Value

Teslas are generally more expensive than other vehicles, and the high value of the car contributes to higher insurance rates. Insurance companies take into account the cost of repairing or replacing the vehicle when calculating premiums, and the higher the value of the car, the higher the insurance rates tend to be.

The cheapest Tesla model to insure

The Tesla Model Y is the cheapest model to insure, with an average rate of $255 per month for the base trim. That's 13% less than the average rate across all new Teslas.

The Model Y is a compact crossover vehicle. These types of cars tend to have the most affordable insurance rates compared to smaller sedans or larger, more expensive, full-size SUVs.

The Model Y is not the most affordable Tesla to buy, but its insurance costs are lower than the Model 3, Model S, and Model X.

Tesla Insurance

Tesla Insurance is the company's in-house insurance option. It is only available to Tesla owners in 11 or 12 states.

Tesla Insurance sets rates using data about how and how much you drive, rather than factors like age, gender, credit score, speeding tickets, or claim history. This means your rates can change a lot from month to month.

Tesla Insurance has received poor customer reviews, with many customers reporting frustrations with the service they received when filing insurance claims.

Third-Party Insurance

Many Tesla owners choose to purchase third-party insurance. Among the large insurance companies, USAA offers the cheapest car insurance for a Tesla Model 3. However, USAA is only available to military members, veterans, and their families.

Nationwide and Travelers are the next cheapest options.

How to save money on Tesla insurance

Shop Around for the Best Rates

The best way to find cheap coverage for your Tesla Model 3 is to compare car insurance quotes from multiple providers. You can typically get free quotes online from major auto insurers, which makes shopping around a straightforward process. Some of the cheapest car insurance companies for Teslas include Nationwide, USAA, Amica, Auto-Owners, and Erie.

Improve Your Credit Score

If you live in a state where credit is considered when calculating insurance premiums, improving your credit score may help lower your Tesla insurance costs.

Take Advantage of Discounts

Tesla offers a variety of discounts that can help lower your insurance premiums. For example, you can get a discount for insuring multiple vehicles through the company, even if they are not all Tesla models. Additionally, Tesla offers unique savings opportunities, such as discounts for having the Autopilot feature or for being a Tesla employee.

Practice Safe Driving

Tesla Insurance uses Real-Time Insurance to calculate your monthly premium based on your driving behavior. The safer you drive, the lower your premium will be. This includes factors such as your Safety Score, which is based on a mile-weighted average of daily Safety Scores over the last 30 days, and the number of miles you drive. Driving fewer miles and maintaining a high Safety Score can help reduce your insurance costs.

Consider the Cost of Insurance When Choosing a Tesla Model

Some Tesla models are more expensive to insure than others due to factors such as the base price, engine size, and additional features. For example, the Tesla Model X typically has higher insurance costs due to its larger engine and faster acceleration. When choosing a Tesla model, consider not only the purchase price but also the ongoing insurance costs.

Bundle Your Insurance Policies

If you own a home or have multiple vehicles, you may be able to save on your Tesla insurance by bundling your policies with the same provider. Many insurance companies offer discounts for customers who have multiple policies with them.

Frequently asked questions