Jeffrey Wade
Tesla cars are generally more expensive to insure than other vehicles. The cost of insurance depends on several factors, including the state in which the driver lives, the model of the car, the driver's age, and their driving history. Tesla's insurance program is only available to Tesla car owners, but it also allows them to insure non-Tesla vehicles. The program is considered the most affordable option in several states, with its average price across all 2022 Tesla models being $187 per month. However, Tesla insurance has been criticised for its use of driving data, which some customers feel unfairly increases their premium.
| Characteristics | Values |
|---|---|
| Reason for higher insurance | High repair costs, lack of Aftermarket parts, lower threshold for total loss, high power output compared to cars in the same class, exclusive use of onboard sensors to determine rates |
| Average cost of insurance | $3,947 per year or $329 per month |
| Cheapest model to insure | Tesla Model 3 |
| Average cost to insure Model 3 | $2,221 per year or $3,200 per year |
| Average cost to insure Model Y | $2,800 per year or $233 per month |
| Average cost to insure Model X | $4,254 per year or $354 per month |
| Average cost to insure Model S | $4,780 per year or $398 per month |
| Average cost to insure Cybertruck | Nearly $5,000 per year or $416 per month |
| Average price across all 2022 models | $187 per month |
| Average national cost of car insurance | $627 per year |
| States where Tesla Insurance is available | Arizona, California, Colorado, Illinois, Maryland, Minnesota, Nevada, Ohio, Oregon, Texas, Utah, Virginia |
What You'll Learn
Repair costs
Firstly, Teslas are produced using expensive materials and technology. The cars have aluminium bodies and parts, which are more costly to repair or replace than traditional steel or plastic components. For example, the Model S has an aluminium frame, which is more expensive and difficult to fix than a steel frame. Additionally, the high-performance batteries in Teslas are extremely expensive to replace if damaged, often totalling the car.
Secondly, there is a lack of aftermarket parts available for Teslas. Tesla does not allow other companies to manufacture their main components, so repairs can only be done at Tesla-approved body shops or service centres using OEM or salvaged parts, which can be more costly. This limited availability of parts can slow down the repair process and increase costs.
The high-performance nature of Teslas also contributes to higher insurance premiums. The powerful output of these vehicles compared to others in their class increases the risk of accidents and the potential for higher repair costs.
Furthermore, the age of the car and the safety features included can impact repair costs. Older vehicles may have higher repair costs due to the availability and price of parts, while newer models with advanced safety features may help reduce repair costs by preventing or minimising damage in accidents.
Finally, the location of the insured and the garaging address can also affect repair costs. Different states have varying labour and parts costs, which can impact the overall expense of repairs. Additionally, safer neighbourhoods with lower incident statistics can result in decreased repair costs and insurance premiums.
In summary, the high repair costs associated with Teslas are a significant contributing factor to their insurance premiums. The unique construction, limited parts availability, high performance, and other factors all influence the potential expense of maintaining and repairing these vehicles, which is reflected in the insurance rates offered to Tesla owners.
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Safety score
Tesla Insurance offers a unique insurance product that uses real-time driving behaviour data to determine a driver's premium. This is done through the Safety Score Beta, which assesses driving behaviour based on several metrics called Safety Factors. These Safety Factors are: Forward Collision Warnings per 1,000 Miles, Hard Braking, Aggressive Turning, Unsafe Following, and Forced Autopilot Disengagement. The more of these factors that are present in a driver's behaviour, the lower their Safety Score will be.
The Safety Score is a value between 0 and 100, with a higher score indicating safer driving. Most drivers are expected to have a Safety Score of 80 or above. A driver's monthly insurance premium is determined by their Safety Score for the previous month. This means that drivers who are deemed to be safer will have lower premiums, while those deemed less safe will have higher premiums. This system incentivises safer driving and potentially lowers insurance costs for drivers.
It is important to note that Tesla Insurance is not available in all states, and in some states, the Safety Score does not affect premiums. For example, in California, the Safety Score is currently only available for educational purposes and does not impact insurance premiums. However, Tesla Insurance is expanding to new states, with the product now available in Texas, Illinois, Arizona, and Ohio.
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Model and trim
The cost of insuring a Tesla varies depending on the model and trim chosen. The Model 3 is the cheapest to insure, with an average rate of $2,221 per year or $282 per month for the newest base model. The Model Y is the next cheapest option, with an average rate of $255 per month for the base trim. The Model S is the most expensive to insure, with an average rate of $413 per month.
The cost of insuring a Tesla also depends on other factors, such as the state in which the car is insured and the safety score of the driver. For example, Louisiana is the most expensive state to insure a Tesla Model 3, with an average annual rate of $5,718, while Hawaii is the cheapest, with an average rate of $2,059. Tesla Insurance uses real-time driving behaviour to determine insurance premiums, with higher safety scores resulting in lower premiums. Upgrading beyond the basic model can also increase the cost of insurance, as the more features a Tesla has, the more expensive it will be to insure.
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Driving behaviour
Tesla Insurance offers competitively priced insurance products based on how and how much you drive. The insurance premium is determined by driving behaviours, and not factors outside of the control of drivers that other insurance providers may use. The premium is based on a mile-weighted average of the daily Safety Scores over the last 30 days. The Safety Score is calculated using data from the vehicle's existing technology, including measures of driving behaviour and miles driven. This data includes the number of forward collision warnings, hard braking, aggressive turning, unsafe following, and forced Autopilot disengagement. The more you drive with Full Self-Driving (Supervised) enabled, the bigger the discount on your insurance premium.
The use of driving data to determine insurance premiums is a significant shift in the industry, as it moves away from traditional policy-centric business models and towards data-driven, usage-based models. This approach incentizes safe driving and can lead to changes in driver behaviour, such as being more cautious when changing lanes or maintaining a safe distance from the car in front. It also raises questions about data privacy, as drivers must weigh the benefits of lower insurance premiums against sharing their personal driving data with Tesla.
Tesla's insurance product is currently not available in California due to state regulations that preclude using driver data to determine premiums. However, Tesla offers an alternative insurance product in California that does not use real-time driving behaviour to calculate premiums. The company is applying to the state to change the regulations and introduce its real-time insurance product.
The implementation of driving safety scores to determine insurance premiums has several implications. It could lead to other carmakers adopting similar data collection methods to offer their own insurance products or sell the data to insurance companies. Additionally, it could impact the determination of at-fault drivers in accidents, as real-time data can provide evidence of driving behaviour leading up to an incident.
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Location
The location of where you live and garage your Tesla vehicle is correlated with safety and incident statistics in the area. Generally, garaging your vehicle in a safer neighbourhood will lower your premium.
Tesla Insurance is currently only available in Arizona, California, Colorado, Illinois, Maryland, Minnesota, Nevada, Ohio, Oregon, Texas, Utah, and Virginia. If you live elsewhere, you will need to compare auto insurance rates to find the best company for you.
The age of the driver is one of the biggest factors affecting insurance rates. Younger drivers, especially teens, will see much higher rates that will decrease as the driver gets older.
Hawaii is the cheapest state to insure a Tesla Model 3, with an average rate of $2,059 annually. The average annual cost of Tesla insurance in New York is $2,179 based on a 2023 Tesla Model 3.
The more you drive with Full Self-Driving (Supervised) enabled, the bigger the discount is on your insurance premium. However, this discount is currently only available in select states.
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Frequently asked questions
Teslas are expensive to insure because they are costly to buy and repair. They are made with expensive parts and materials, and their batteries cannot be repaired, only replaced. They also have a longer battery range than other electric vehicles, so they tend to be driven more, increasing the risk of accidents.
Tesla Insurance uses Real-Time Insurance to calculate monthly premiums. This means that premiums are based on how safely you drive. The more miles you drive, the higher your premium will be. Your premium is also based on the model of Tesla you drive, your address, your coverage selection, and your vehicle's monthly Safety Score.
Tesla Insurance is only available to Tesla car owners, but you can also insure non-Tesla vehicles with them. Their rates are very competitive, especially for good drivers, and they are substantially cheaper than other companies. Their insurance is currently available in 11 or 12 states.
