Tesla Insurance Review & Complaints: Car Insurance (2023)

People with specialty cars, like classics and antiques, you can get specialty car insurance or collector car insurance. Electric cars are definitely specialty vehicles but, historically, there hasn’t been equivalent specialty insurance available for them.

To compound the problem, as vehicles with more and more autonomous features have made an entry onto the scene, there’s been a question over how insurance will work. It’s been muddy water. Who is responsible when an autonomous vehicle is in an accident? This has left autonomous vehicle owners in a gray area among the major insurance companies.

Tesla jumped right into that insurance industry gray area and they’re answering the question by creating a flagship insurance product. Who better to insure their own specialty vehicles? They know every in and out of their vehicles, from something as simple as a seat belt all the way up to their advanced driver assistance features.

But is Tesla good insurance? The Tesla car insurance program is brand new, but it looks promising.

What states have Tesla insurance available?

Tesla Insurance is available in California, only. They plan to expand into other states in the future. Which states will likely be next? Matthew Edmonds, head of Tesla Insurance said:

“Find the states where the population is, those will be the states we’ll be going to.”

When you examine state populations, the five biggest after California are the following:

• Texas
• Florida
• New York
• Pennsylvania
• Illinois

When you look at electric vehicles sales in each state, here are the top five after California for 2017 and 2018:

• New York
• Florida
• Washington
• Texas
• New Jersey

Based on those two lists, you shouldn’t be surprised if Tesla announces that they’ll start offering auto insurance policies in New York or Florida next.

When you look at the number of electric vehicles in California, you can see why Tesla Insurance launched there.

In 2018, there were 153,442 electric vehicle sales in California. To put that number in perspective, the state with the next highest electric vehicle sales was New York with 15,752 sales. That’s about 10 percent of what was sold in California.

Does Tesla offer cheap car insurance rates?

Once you get your quote for Tesla Insurance, compare to the average auto insurance rates of some of the most popular car insurance companies in California.

Tesla insurance is available in California. It’s only available for Tesla vehicles. It’s definitely a niche market. The company plans to expand its insurance to other states in the future.

They claim their monthly premium rates are 20 percent lower than the competition and in some cases up to 30 percent lower.

Even though they only offer coverage in California, let’s hypothetically look at how much 20 percent would save you if they offered coverage in your state (which they likely will, eventually).

Keep in mind this chart is just hypothetically based on the 20 percent savings on the state average insurance costs. Tesla Insurance is not available nationwide, and rates will certainly vary, especially since these are luxury cars.

Why are Tesla’s rates so low?

Teslas are more expensive to insure than other similar vehicles. This chart from the Insurance Institute for Highway Safety (IIHS) compares the claims costs of electric vehicles. The zero-percent line is the average cost of insurance claims for non-electric vehicles.

The Tesla Model S has more claim frequency, claim severity, and overall losses than other electric vehicles, the Nissan Leaf, and traditional vehicles.

So, how can Tesla offer coverage for what they claim is 20-30 percent lower than the competition? One reason is their faith in Tesla’s safety features.

If that’s their reason, you may still be wondering how they can do that. The safety features haven’t stopped the overall losses for the Tesla Model S to be lower. You can read about how expensive the Tesla Model S is to insure for more information.

Faith in Tesla Vehicles’ Safety

Here’s a simple explanation of how insurance companies work. They charge a premium to take on risk. They keep the premium low enough to entice customers but high enough to cover their risk and pay their employees. It’s an art to find appropriate rates.

One thing that insurance companies look at is the safety features of the vehicle they’re going to insure. They’re looking at the exact same safety features that Tesla is looking at.

Here’s the difference. The majority of insurance companies say there hasn’t been enough data collected to prove that the safety features on a Tesla actually reduce the likelihood of claims.

Tesla Insurance, on the other hand, trusts the safety of its vehicles and is willing to bet on (or insure, in this case) it.

Still, which you consider the chart above and see that Teslas claims are higher, you may be wondering how they can promise low rates.

Repairs at Tesla Repair Shops

Tesla Insurance plans to work closely with Tesla repair shops which, in theory, should reduce the overall cost of repairs because the shops specialize in Tesla vehicles and know the ins and outs of their repairs.

Low Commissions

Because they’re not hiring outside agents, Tesla claims they will be able to save money on the commissions. Other insurance companies have to pay commissions to agents for policies sold. Tesla will not.

Low Risk of Theft

Teslas are hard to steal, so there’s a much lower risk of needing to file a comprehensive coverage claim for a stolen vehicle, which can also bring down the average cost for drivers.

What insurance coverage is offered?

Tesla will offer coverage for Tesla vehicles. Even if you bought a used Tesla, you can still get Tesla Insurance.

Their coverage options will exceed the state-required minimum insurance requirements. Many car insurance companies will not let you purchase the bare minimum insurance plan that the state requires because it’s not sufficient to protect your assets.

Teslas are expensive vehicles, and owners will tend to need full coverage to protect their investment and not just their liability.

Tesla Insurance will offer liability, collision, and comprehensive. They will also offer special coverages that are unique to the needs of their vehicles and other optional coverages.

One thing to note is that, if you drive for Lyft, Uber, or any other ridesharing service, Tesla insurance does not cover you when you’re driving in a commercial capacity. You’ll need to look into commercial auto insurance.

What are Tesla’s bundling options?

Tesla only offers car insurance, so you won’t be able to get any insurance discounts for bundling your home and auto. You will, however, be eligible for a discount if you insure more than one Tesla.

What are Tesla’s programs?

Tesla has an extremely loyal customer base because they treat their customers well. Also, they’re happy with the safety features of their Teslas.

There are no franchises. Customers deal directly with headquarters to order their Tesla. And because they order directly through Tesla, their customer information is all available to Tesla Insurance when they call for a quote. That’s why it’s so easy to get a quote.

When you purchase a Tesla vehicle, you set up an online account for your vehicle. Once you get your insurance policy activated, you can access it and make changes in your Tesla account under “my policy.”

How do you file a claim?

To make a claim, you will need to call the number on your insurance card. You will be assigned a claims specialist who will be your point of contact throughout the entire claims process.

Because Tesla knows Tesla best, when you have insurance through them, you’ll have access to Tesla Body Repair Centers. These shops can more quickly provide an assessment and work with an adjuster.

How is Tesla insurance customer service?

They haven’t been offering car insurance for long enough to produce any reliable data as far as customer satisfaction goes. But they have vehicle customers that are very satisfied.

If their customer service commitment carries over from vehicle sales to insurance sales, they will likely have very happy customers.

Tesla customers topped Consumer Reports list of most satisfied owners. They have topped the chart for the past three years. This fact is surprising when you consider that Consumer Reports rated the vehicles themselves as less-than-reliable.

What this dichotomy indicates is that Tesla is able to keep their vehicle owners happy even when the vehicles have problems, thanks to the exceptional user experience that they go above and beyond to provide.

What are the pros and cons of Tesla car insurance?

There are legitimate concerns to consider. We’ll address a few of them:

Vehicle Data Use in Rates

Tesla has data on all its vehicles. Think camera data, braking data, acceleration data, everything. So far, they say that they will use their data as a whole to determine rates by state. In other words, they will look at the overall trends but not individual reports from individual vehicles.

That’s how they’re using data in California, currently. But a senior executive said that the laws in each state and the authorization of drivers will determine what data they use as they expand their service outside of California.

Small Insurance Customer Base

Another concern is that in the world of insurance, a greater and more widespread customer base equals better risk management. And Tesla Insurance does not have a big, widespread base. Think of it like this:

You started a brand new insurance company and had five customers in total. They paid a combined $10,000 a year in premiums, for five years. Things are looking good for your company. Your customers have made no claims and you just made $50,000.

And then through a stroke of bad luck, two of them were in accidents that resulted in major injuries. One made a claim for $40,000, and the other made a claim for $25,000. Suddenly your company is no longer solvent.

If you had a bigger base of customers to share the risks, this type of scenario is not as likely to happen.

Tesla has a small customer base. Who’s backing their risk? While they haven’t announced this, the California Department of Insurance lists State National Insurance Company which is part of Markel Corp as Tesla’s underwriter.

This partnership gives Tesla Insurance much better financial backing and security than if they were completely independent.

The Company Has Experienced Many Hardships

It’s a fact that the company has its share of ups and downs as we discussed earlier, but it has always bounced back. That fact needs to be considered as equally important if not more important than the fact that they hit rock bottom several times.

What is Tesla’s history?

On July 1, 2003, Tesla was born. The next year, Elon Musk invested over $6 million in the company and became chairman of the board. In 2008, the first Roadster was manufactured and production began.

In June of 2009, Tesla became a publicly-traded company. Their first semi-autonomous vehicles hit the road in 2015. And finally, in August of 2019, they broke into the insurance business and started offering car insurance for Tesla vehicles.

Throughout these years of history, there have been ups and downs. There have been lawsuits and controversy. Stocks have soared and plummeted. Stable is not a word you’d use to describe the company.

However, as unlikely as it seems, they’ve rebounded from rock bottom every time and landed on their feet. And there’s something about their ability to do that, that makes you want to see what happens next.

What is Tesla’s position for the future?

There’s not a clear answer to this question. The company as a whole has seen its share of ups and downs in its brief history. Their insurance business arm is so new, that there isn’t a track record to look back on.

There are going to be problems in the near future, just because any new company has to work through problems. You don’t know what issues will arise until they happen. Then Tesla will deal with it.

Because they have the financial backing of State National Insurance Company, insurance customers can rest assured that they will be adequately protected financially should they make a claim.

State National has an AM Best rating of A, so their financial stability looks excellent.

Though some would argue, their position for the future looks bright. They’re an innovative company and they’ve overcome adversity enough times that they should be able to do it again if the need arises.

What is Tesla’s online presence?

Tesla has a website, of course, but you can’t get a quote on it like you can with most insurance carriers. This can make it more difficult to know how to get car insurance if you aren’t familiar with their processes. You need to call their phone number; they claim that drivers can get auto insurance quotes in under a minute. The process is so quick because once you tell them your VIN, they can pull up all your information.

As a Tesla owner, you have access to the Tesla app. The app will have everything you need as an owner, and you can also access your Tesla Insurance account through it.

Does Tesla run commercials?

There’s a certain genius to Tesla’s marketing. They get people. And as shocking as it is, they have engaged more people through their organic social media marketing than any of their competition has engaged through paid social media marketing marketing.

That’s right, Tesla spent zero dollars and managed to do a better job promoting their vehicles than companies paying big bucks.

Is Tesla involved in the community?

Tesla’s commitment to community centers strongly on their customers. They focus on keeping their customers happy and going above and beyond what is expected to create the best possible customer experience.

They also have a strong commitment to renewable energy and zero emissions, making the world better for every individual. Additionally, the advanced safety features that these luxury vehicles are equipped with also help make the roads safer for every driver. No matter what people drive, they should try to avoid distracted driving.

How do Tesla’s employees view the company?

With all the ups and downs the company has weathered, employees have been hired and employees have been fired. There are some employees that are very happy with their jobs, and there are others that are bitter about how they’ve been treated.

• 52 percent of employees would recommend working at Tesla to a friend according to GlassDoor
• 66 percent of employees approve of CEO, Elon Musk
• 3.3 out of five stars rating from employees

Common employee complaints include the number of hours they have to work. A common pro cited by employees is how much you learn working there.

What sets Tesla apart?

Tesla only makes electric vehicles. They’re committed to renewable energy. They aim to reduce emissions to zero. Let’s take a deeper look at Tesla’s safety features because that’s really where Tesla stands out.

Driver Assistance Features

According to the National Highway Traffic Safety Administration (NHTSA), there are levels of autonomy related to vehicles. Here’s their standard.

Tesla is one of the companies leading the way in driver assistance technology with its autopilot features. Their vehicles that are on the market right now are level two.

Their claim is that these driver assisting technologies make the cars safer, and that’s why they will be able to offer such low insurance prices to cover their vehicles. Here’s how their autopilot system works:

• Eight external cameras
• Radar
• 12 ultrasonic sensors
• Onboard computer

Older models made between 2014 and 2016 have just one camera and less-powerful radar and ultrasonic sensors. With that said, these are still some of the safest vehicles on the road. You can also sometimes get car insurance discounts when you have more safety features in your vehicle.

What’s the bottom line?

Based on the genius of Elon Musk and the reputation of Tesla, it’s likely that Tesla Insurance will have some issues in these early stages but they will probably be able to work through them and grow and become the go-to insurance option for Tesla vehicle owners.

If you own a Tesla and live in California, you should take the time to call 1-844-34-TESLA to get a quote. Then you should compare that to your current policy and quotes from other providers to see if you really can save 20-30 percent on your insurance premium.