Feb 23, 2023
As he did with the electric car industry, Elon Musk is aiming to revolutionize insurance — and he’ll do it one state at a time, if he has to.
The maverick introduced this car insurance to Texas in October 2021, and then to Illinois in December of that year. In 2022, Tesla Insurance is now open to Tesla owners in several states.
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While Tesla Insurance may be an option for some Tesla car owners, it doesn’t mean it's automatically the right choice for you.
More: Is buying a Tesla worth it?
Who can buy Tesla Insurance?
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, Model Y or Roadster, you’ll have to look elsewhere to find a discount on car insurance.
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Where is Tesla Insurance available?
And while Musk plans to offer his in-house insurance around the globe someday, he acknowledges that it’s been slow going so far. Today, Tesla Insurance is currently available in 11 states.
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- Arizona
- Colorado
- Illinois
- Maryland
- Minnesota
- Nevada
- Ohio
- Oregon
- Texas
- Utah
- Virginia
“The regulatory process for approval to offer insurance is extremely slow and complex, varying considerably by state,” he wrote on Twitter.
So even if you are a luxury EV driver who would benefit by switching to Tesla Insurance, it may be a long time before you can take advantage.
How much does Tesla Insurance cost?
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 recently studied how much it would cost each year to insure the various models available. 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
Of course, rates vary greatly from person to person, place to place and insurer to insurer, which is why you should always compare quotes from multiple companies.
Tesla Insurance says it charges less than the average insurer because it trusts its cars’ advanced safety features. Plus, it has access to a wealth of data to back up that trust, harvested from the active safety and driver assistance features that come standard in all of its new cars.
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The company says it also has an easier time sourcing and repairing the expensive parts that make up its electric vehicles.
As for special features? In addition to the standard coverage options, Tesla offers an “autonomous vehicle protection package” that safeguards you from liability when the car is on autopilot.
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How Tesla Insurance works
Tesla is enthusiastic about its use of data, and the company says it uses real-time data from the vehicle to help analyze how the vehicle is being driven. Unlike other usage-based insurance, there is no additional device that needs to be installed in the Tesla.
To note, the company says it doesn't monitor your location or keep any history of your driving locations.
Factors that can impact your premium
A driver's premium will be based on factors including: how safely you drive, which model Tesla you have, where you live, how much you drive, the level of coverage you select, and how many vehicles you insure.
Tesla Insurance also doesn’t cover ride-hailing work or any other activities that would require a commercial insurance policy. So if you plan to recoup some of the cost of your car by driving for Uber or Lyft, you can’t do it under Tesla Insurance yet.
Factors that won't affect your premium
Unlike other car insurance companies, Tesla says they have don't look at some of the more traditional factors to determine how much you'll pay for car insurance. These factors include:
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- Credit score
- Age and gender
- Marital status
- Accident/violation history
How all drivers can save on car insurance
For most drivers in most states, saving 20% or 30% through Tesla Insurance simply isn’t an option. Fortunately, drivers have several ways to slash their premiums, whether they live in California or Wyoming, and whether they own a Model S or a Toyota Corolla.
The No. 1 thing you can do is explore your options. Even if you do have access to Tesla Insurance, it may not automatically be the cheapest option for you.
Insurers look at all kinds of risk factors to decide your premiums, including your vehicle, driving record, ZIP code and even your marital status. And since every insurer uses its own formula, you could find major savings just by shopping around for multiple quotes.
If you haven’t compared quotes this year — or in the last few years — you may be paying hundreds of dollars more than you need to. What's more, be sure to ask about car insurance discounts. You can use the same strategy to save on home insurance and health insurance, too.
Another way to save on car insurance is to boost your credit score. In most states, insurers can use your credit information to help set your premiums, and they see people with high debt as inherent risk takers.
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Sigrid is a senior associate editor on the Moneywise team, where she has also worked as a reporter and staff writer.
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