Watch your back Geico? Move over Progressive because this week, Tesla released it’s new insurance product to the public or rather to anyone who owns a Tesla. This is HUGE because up until now, car companies were not in the business of providing insurance for their vehicle. Rather they left it up to third-party companies like Allstate to make sure you were “In good hands” when it came to covering your vehicle and we all know how that has turned out for consumers. You will be hard-pressed to find a car owner who doesn’t have issues with their Insurance company. Actually I challenge you to find any insurance customer who doesn’t have profound issues their insurance. Car manufacturers have always seen insurance as a necessary evil, a part of a product lifecycle that is often thoughts of as an afterthought to be handed over and pawned off to third parties.


This mentality of insurance of a byproduct is at the root cause of why practically ALL insurance companies sucks. However when you really think about it, it makes perfect sense that the manufacturer of a vehicle is ideally suited to provide insurance on it’s product because when you break down the purpose of vehicle insurance, you are left with two general types of claim (1) claims that have to do with loss of property (the car or other peoples properties involved int he accident), and (2) claims that have to do with the loss (or damage) of life. The second type of claim is a given and all Insurance companies have to deal with that cost/risk equally. However when it comes to the loss of property which is by far the more frequent type of claim filed, being the manufacturer of the very product you are insuring gives you a huge advantage. From the moment Tesla announced it’s collision repair service, I could see this coming as the logical next step.
Think about it. Who elsie is more perfectly suited to easily and cheaply access parts and services expertise for it’s products than the actual product manufacturer. This where Tesla’s stroke of genius comes into play. By being the manufacture of the product it insures, it can drastically reduce it’s cost overheads on claim premiums by 30% or more. That’s the very reason why Tesla can confidently claim that its new insurance offering will provide customers with 20% to 30% lower insurance rates. It’s like a drug dealer being his or her own supplier. You get the best shit at the best prices.
However the savings in parts and labor is not the only the only way Tesla’s new insurance product benefits from lower costs. When you look at the unparalleled safety features within its vehicles, including its Autopilot driver assistance technology, you can see how Tesla is able to beat any other insurance offer using the immense amount of data it has gathered to date for the billions of miles so fat driven by Autopilot on Tesla vehicles. “Because Tesla knows its vehicles best, Tesla Insurance is able to leverage the advanced technology, safety, and serviceability of our cars to provide insurance at a lower cost,” the company said in the post. However for now, the Tesla insurance product is only available to Tesla owners in California and covers the Model S, Model X, Model 3 and soon to be released Roadster.
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.” Well he was right and I don’t see why any Tesla owner wouldn’t want to have their vehicles insured by the very people who made them. Being able to draw on its deep insight and familiarity with its own vehicles gives Tesla a better understanding of the technology and repair costs. This helps to eliminate all the hidden and often inexplicable fees and surcharges traditional insurance companies routinely levy on top of the actual costs of repair.
Big Brother Musk


Tesla says it will asses each policy based on an individual’s driving record and “other factors that can typically impact a person’s insurance rates”, which is standard practice in the insurance industry. However upon reading this, I couldn’t help but feel a bit concerned of the possibility that Tesla might use my driving data to make decisions on what premiums to charge me. My concern was justified because Tesla immediately then went on to say that it won’t use or record individual vehicle data, such as GPS or vehicle camera footage, when assessing insurance. The company said it will rather rely on anonymized data taken from Tesla’s global fleet to help determine rates and I’m fine with that. I think I speak for most Tesla owners when I say we value our privacy and don’t want Big Brother Musk spying on our driving habits and making decisions that can affect us financially based on information which we deem should remain private.
Elon Musk’s comments during its first-quarter earnings call with analysts in April where he seemed to suggest rates might be weighted based on more uniquely identifiable data on each vehicle, leaves room for more concern. He went on to say that Tesla has an “information arbitrage opportunity,” elaborating that it’s ability to capture individual driving/driver data, gives Tesla a direct knowledge base form where to evaluate and quantify of the risk profile of a particular driver and car. If customers want to buy Tesla insurance, they might have to agree to “not drive the car in a crazy way,”. So to put it in plain English, Elon Mush is saying you can drive crazy, they’ll just have to charge you a higher insurance rate. I don’t think I am a crazy driver but I still fear this possibility of Tesla jacking up my insurance rate based on information it collects about my driving habits and that just might be enough to keep me on the sidelines when it comes to getting Tesla’s insurance product. We haven’t even discussed the potential ramifications of Netflix and Chilling in your Tesla and how that can factor into your insurance rate.
Commercial Fleets Excluded


It’s important to note that the Tesla insurance product does not cover commercial fleets such as companies using the Teslas for ride-hailing, rental or car-sharing services. Also owners like me looking to insure their multiple Teslas can benefit from further discounts and cost savings, 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 and customers ordering new vehicles can request a quote prior to delivery once a VIN has been assigned to their Tesla Account. Also Tesla Insurance can be canceled at any time. I wander if that’s the same for it’s in-house leasing service…just asking for a friend.
By the way if you like this post and you are in the market for a new Tesla, Tesla has an amazing referral program that offers you 1000 free supercharging miles if you use a referral code when you make your purchase. As a two-time Tesla owner, having owned a model S and model X, I can assure you that purchasing a Tesla will be the best automotive decision you’ve ever made and will ever make in your life. So why not make use of my referral code below and we can both continue to enjoy the wonderful Tesla life.
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