Tesla promises up to 30% lower rates with new car insurance play
Tesla said Wednesday it has launched an insurance product, promising owners of its electric vehicles to deliver rates 20% and even as high as 30% lower than other insurance providers.
For now, the product known as Tesla Insurance, will only be available to owners in California. The business will expand to additional U.S. states in the future, Tesla said, without naming where or providing a timeline.
The announcement follows Tesla CEO Elon Musk’s promise back in April that the company would launch an insurance product “in about a month.” At the time, he said it would be “much more compelling than anything else out there.”
The company argues that Tesla Insurance will be able provide insurance at a lower cost by leveraging the “advanced technology, safety, and serviceability of our cars.” In short, Tesla is saying that its deep insight and familiarity with its own vehicles gives it a better understanding of the technology and repair costs. This helps eliminate fees taken by traditional insurance carriers.
Tesla says the cost of each policy will be based on an individual’s driving record and “other factors that can typically impact a person’s insurance rates.” The company says it won’t use or record vehicle data, such as GPS or vehicle camera footage, when pricing insurance. However, the company said it will use anonymized data taken from Tesla’s global fleet to help determine rates.
Musk made comments during a first-quarter earnings call with analysts in April that seemed to imply rates might be based on even more specific data, although he didn’t provide details. He said Tesla has an “information arbitrage opportunity,” explaining that it’s able to capture driving data, giving the company direct knowledge of the risk profile of the driver and car.
If customers want to buy Tesla insurance, they might have to agree to “not drive the car in a crazy way,” Musk said at the time. He later added that they can drive crazy, they’ll just have a higher insurance rate.
Tesla insurance won’t cover commercial services such as using the vehicle for ride-hailing or car-sharing services.
Owners looking to insure multiple Tesla vehicles may also be eligible for further discounts, the company said,
Existing Tesla customers in California, and eventually owners in other states, are able to purchase a policy through a dedicated web page. Customers ordering new vehicles can request a quote prior to delivery once a VIN has been assigned to their Tesla Account, according to the company.