Elon Musk is taking over auto insurance too — should you get Tesla to cover your car?

Elon Musk is taking over auto insurance too — should you get Tesla to cover your car?

Elon Musk is taking over auto insurance too — should you get Tesla to cover your car?

As he did with the electric car industry, Elon Musk is aiming to revolutionize car insurance, promising drivers up to 60% off their premiums.

Tesla Insurance launched in Colorado, Oregon and Virginia this month, after bringing its services to 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 from being judged on their credit, age, gender or even their claims history.

While all of that sounds enticing, Tesla Insurance may not be a perfect option for everyone — if it’s even an option at all.

Are you part of the club?

Right off the bat, Tesla Insurance is only available to Tesla car owners, and there are no plans to change that.

The company says the reason it offers lower rates in the first place is that it “uniquely understands 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 big discount on car insurance.

And while Musk plans to offer his in-house insurance around the globe someday, you might have a bit of a wait depending on where you live.

“The regulatory process for approval to offer insurance is extremely slow and complex, varying considerably by state,” he wrote on Twitter last year.

Why you might switch to Tesla Insurance

Electric cars typically cost more to repair or replace than their gas-guzzling counterparts, and as a luxury electric vehicle, Teslas can be pricier still.

Motortrend has studied how much it would cost each year to insure the various models available with a traditional provider. Among other factors, these averages assume the owner is a single 40-year-old man with a clean record and good credit score:

  • 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

An average driver could save between 20% and 40% by switching, Tesla says, while some drivers could save between 30% and 60%.

The company says it can charge less because it trusts its cars’ advanced safety features — and the driving data it harvests straight from your vehicle.

“Tesla uses specific features within the vehicle to evaluate your premium based on your actual driving,” Tesla says in a statement. “You will make monthly payments based on your driving behavior instead of traditional factors like credit, age, gender, claim history and driving records used by other insurance providers.”

That’s a big change. While plenty of other insurers offer discounts if you install a tracking device and drive safely, they typically use that data alongside your credit, claim history and other factors to decide your rates.

Lastly, being held accountable for your behavior could force you to drive more safely, even if that means getting to your destination a little slower.

“Having real-time feedback for driving habits is actually resulting in Tesla owners driving the cars in a safer way because they can see … ‘OK, this is affecting my insurance rate, or it isn’t,’” Musk said in an April earnings call.

Why some might pass on Tesla Insurance

Speed demons with no desire to change may not appreciate their insurer knowing how they truly act behind the wheel, especially if they’ve benefited from a clean driving record or excellent credit.

Some drivers also avoid installing tracking devices out of privacy concerns, though in this case it’s worth noting that the technology needed to use Tesla Insurance already comes baked into Tesla vehicles.

And while the company is enthusiastic about its use of data in most states where it operates, laws in California forbid insurers from using behavior-tracking tech to set car insurance rates.

“We want to have the kind of real-time insurance where your insurance costs are based on your actual driving history, which is the right way to do it,” Musk said at a shareholders meeting last year. “So, we are trying to get permission from the regulators.”

For now, Tesla isn’t using data from individual cars in California and is relying instead on anonymous info pulled from a wide pool of drivers. That means a model Tesla driver in Cali will pay the same rate as a daredevil who makes hairpin turns and brakes at the last minute — assuming no one actually gets in an accident.

Tesla owners in the Golden State would be wise to compare quotes from multiple companies to ensure Tesla Insurance still offers the best rate.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Source: https://finance.yahoo.com/news/elon-musk-taking-over-auto-130000318.html