- Tesla vehicles are, in some cases, more expensive to insure than cars from competing automakers.
- The electric-car maker has launched an insurance product, Tesla Insurance, for California customers that is designed to give its customers a discount of up to 30% made possible by Tesla’s more sophisticated understanding of its vehicles’ technology, safety features, and repair costs, the company said.
- Publicly available documents from the California Department of Insurance show Tesla is working with at least two insurance providers: State National Insurance Company, headquartered in Bedford, Texas, and Liberty Mutual based in Boston.
- Tesla’s insurance licence in the state of California lists the automaker as a property-broker agent and a casualty-broker agent. The documents show the licence has been active since August 2017.
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Tesla vehicles are, in some cases, more expensive to insure than competing vehicles, a problem the electric-car maker has tried to address by introducing its own insurance product, Tesla Insurance, for California customers on Wednesday.
Tesla said the program was designed to give its customers a discount of up to 30% made possible by the company’s more sophisticated understanding of its vehicles’ technology, safety features, and repair costs.
Consumers often buy multiple kinds of insurance or insurance for multiple vehicles at once to get a bulk discount, said Maryann Keller, the principal at the automotive consulting firm MK&A. “A very high percentage of Tesla owners have another car, and this insurance will not cover the other car if it’s a brand other than Tesla,” Keller said, asking: “In the grand scheme of their overall insurance planning, is this going to be worthwhile?”
While it is not possible to insure a Tesla vehicle and a non-Tesla vehicle together on the same Tesla insurance policy, the company says it can help customers place their non-Tesla vehicles with another provider.
It remains to be seen whether many customers who choose to insure two or more Tesla vehicles will see savings that are comparable to a similar multivehicle discount with another insurance carrier.
Tesla’s insurance rollout has raised questions
The information Tesla initially offered about its insurance product left open some questions, including whether Tesla would underwrite the product itself or serve as a broker for an insurance company that would collect premiums and pay out benefits.
A Tesla representative told Business Insider on Thursday night that the automaker was working with other companies in the insurance industry and planned to become a full-fledged insurance carrier in the future.
Publicly available documents from the California Department of Insurance show Tesla is working with at least two insurance providers: State National Insurance Company, headquartered in Bedford, Texas, and Liberty Mutual, which is based in Boston.
Tesla’s insurance licence with the state of California lists the automaker as a property-broker agent and a casualty-broker agent. The documents show the licence has been active since August 2017.
Like the auto industry, insurance is a low-margin business, as increased competition has made the costs of acquiring customers more expensive, Krzysztof Kujawa, the chief product officer at the insurance-shopping website Gabi, said. That means Tesla Insurance may not drive profits for a company that has posted losses in all but four quarters since going public in 2010.
But earning a profit on a standalone basis may not be the objective of Tesla Insurance, Kujawa said. Tesla may instead see the product as a marketing tool designed to boost vehicle sales by addressing the perception that Tesla vehicles require higher-than-normal insurance costs.
“I think that issue is more important than ever,” Kujawa said.
While customers of Tesla’s high-end Model S and Model X SUV – which start at about $US80,000 – may not be worried about higher insurance costs, that isn’t necessarily the case for customers of the Model 3 sedan, which starts at about $US39,000. And affordability could become an even bigger concern in the future, as Tesla CEO Elon Musk’s intention is for the company to become a mass-market automaker that sells millions of vehicles each year.
Tesla briefly removed the option to get a policy quote from its website hours after the product was announced Wednesday. The company said internal errors were affecting rates quoted to some customers. That functionality came back online as of Thursday night.
This story has been updated.
Are you a current or former Tesla employee? Do you have an opinion about what it’s like to work there? Contact this reporter at [email protected].
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