Why Is Tesla Car Insurance So High & Expensive?

‍‍‍Why is Tesla Car Insurance so High?

Tesla became enormously popular in recent years; the company delivered nearly a million vehicles in 2021, which makes the company the world’s most popular EV manufacturer, and for more than a single good reason.

New Tesla owners generally have plenty of things to appreciate about their vehicle, considering that a powerful battery pack delivers up to 400 miles of range on a single charge and the 5-star safety rating from the National Highway Traffic Safety Administration (NHTSA). Not to mention an additional eight-year/100,000 miles warranty on the battery, granting users a replacement power source if anything goes wrong.

However, these features come at quite a hefty price tag — just a couple of hundreds shy of $50,000 for the Tesla Model 3 Standard Range. Admittedly, it’s quite a revolutionary car with very few shortcomings — one of them being a relatively low ground clearance — and its benefits and advantages justify the price.

However, another thing that’s also pricey when it comes to Tesla vehicles is their high insurance cost. Admittedly, electric vehicles have a higher insurance premium in general, but Tesla EVs may cost even more to insure compared to an average EV. This begs the question, why is Tesla car insurance so high? Well, there are several reasons: ‍

Luxury

Tesla cars are expensive to insure because they’re more expensive to buy and repair than more accessible vehicles. Since they’re considered luxury cars, insurance companies regard Tesla cars as costing more to repair if they’re damaged in accidents and more likely to be the target of theft. The vehicle’s price tag is a major driving factor in determining the height of the insurance costs.

For example, the Nissan LEAF costs south of $30,000, so it stands to reason that it’s more affordable to insure than other luxury electric cars, like the Porsche Taycan, whose $83,000 price tag warrants a more costly insurance premium. The average insurance cost for a Model 3 is approximately $3,400 for full coverage, which sits somewhere in between the aforementioned car models.

Repairability

Although EVs tend to be less expensive to maintain than gas-powered vehicles, that doesn’t mean they’re less expensive to repair if damaged in an accident. While many cars allow for generic aftermarket components to be used in repairs, Tesla cars boast high-tech sub-systems, including touchscreen displays, electric drives, and autopilot features.

Said systems are more expensive and harder to find and replace if damaged in an accident. On top of that, finding a qualified technician to repair or replace said systems and specialized parts is not only expensive but quite difficult as well. These costs are mostly covered by insurance companies, which justifies the price tag associated with a costly insurance premium.

Body Work Limitations

In addition to the higher base costs of their vehicles, and their use of specialized parts, Tesla vehicles also use aluminum frames, as opposed to traditional-made steel car bodies. Aluminum is a pliable metal, but it’s very difficult to mend by welding, as it requires specialized welding methods. This makes the entire process pricier.

The usual fender-benders aren’t as pricey — though they’re pricier than on steel-bodied vehicles — more extensive damage is pricey to repair. Tesla has its proprietary network of body shops and  Tesla-Approved Collision Centers that can provide body repairs. This means that your Tesla will be out of commission longer, leaving your insurance to pick up the replacement vehicle’s tab.

Coverage Needs

Considering the high base price tag of the vehicle and the costs associated with repairs and acquisition of complex electronics, Tesla EV isn’t a car to cheap out on when it comes to insurance. To adequately protect yourself and your Tesla EV, collision and comprehensive coverages are usually the most recommended options.

Other Factors That Affect Insurance Costs

As seen above, there are several factors that affect Tesla insurance costs, and most of them are tied to the make and the model of your Tesla EV. However, there are also several variables that help determine the cost of your insurance premium.

Location

It’s important to get an exact estimate for the price of auto insurance at your location because insurance costs differ from state to state. For example, the more accessible car insurance cost in California is $70/month ($840/year), which is significantly more affordable than some of the nation’s highest rates in states like NY and New Jersey.

It’s also important where you park your car — whether in the garage or on the streets — as it can affect the cost of your insurance premium.

Driving History

Tesla Insurance, the company’s own insurance program, uses a proprietary real-time monitoring (telematics) system which keeps track and records your driving habits and behavior. The company then uses that information to determine your insurance premiums — and better the driver, cheaper the premiums.

To determine just how good of a driver you are, Tesla introduced a Safety Score, a metric that’s based on your driving style. The main idea is to use five safety criteria — forced autopilot disengagement, aggressive turning, hard braking, forward collision alerts, and unsafe following — to form a Safety Score. This score is displayed with a numerical value ranging from 0 to 100, with higher scores indicating a more conscious driver.

In the beginning, every user is assigned a Safety Score of 80-84, which costs somewhere around $1,186. Your score will fluctuate with time as your Tesla EV collects information about your driving practices, adjusting your premium on a monthly basis, with Tesla notifying you f the price change in advance.

For example, less conscious drivers with a Safety Score of 40-44 will pay a 33% higher insurance premium. Those with a Safety Score of 15-19 will pay an 85% higher premium, sitting at $2,188, while those with a 100 Safety Score get a 25% discount on their premium, paying only $887 a year for their Tesla EV insurance.

Level of Coverage

Lastly, the level of insurance coverage has a significant impact on the insurance premium. If your vehicle is leased or financed, your lender might require you to obtain and maintain full coverage until you repay the loan. Those that outright own a Tesla have more options available, like choosing an insurance policy with higher deductibles.

Tesla’s proprietary Car Insurance policy offers different coverage options:

• Glass — glass insurance covers repairs or replacement of damaged windshields and side and rear windows.
• Accident or collision — covers repairs for vehicles damaged in accidents with other vehicles and stationary objects.
• Comprehensive — A comprehensive package covers damage to the vehicle incurred by bad weather, theft, or wild animals.
• Roadside assistance — covers the costs of towing assistance if your EV isn’t drivable due to a flat tire, empty battery, or an unexpected malfunction.
• Special coverages — these include coverage for wall chargers, lost or damaged key fobs, and panoramic roofs.

Tesla Insurance

The most affordable insurance for Tesla’s EVs is Tesla Insurance, Tesla’s own insurance product introduced in 2019 as means of easing the exorbitant insurance costs Tesla owners faced when insuring their EVs. The company has stated that its insurance package can save Tesla drivers approx. 20% on insurance compared to other carriers.

However, this insurance option is only available in California and eight other states, though it plans to expand its insurance policies to the rest of the US in the future.