Tesla Insurance – More Personal & Cheaper

Tesla has been dabbling in insurance since August 2019, when they launched their first Tesla Insurance in California.

During the release of their insurance, Tesla stated that drivers in California could expect discounts compared to normal insurance of around 20-30%.

Why Is Tesla Insurance Cheaper?

Tesla has often said that it knows its cars and drivers better than anyone else. And in the insurance game, that is what it is all about.

The reason Tesla Insurance is actually so much cheaper is because they have direct data from the car via telemetry. Tesla also knows exactly what it costs to repair one of their vehicles and they can do it cheaper than anyone.

Tesla also has a lot more data on exactly how often vehicles are in accidents and how much safer their vehicles are than other insurers perhaps expect.

Where Is Tesla Insurance Available?

After the initial rollout in California, Tesla has been working on expanding its insurance offerings throughout the USA. They stated in their Q3 earnings call that Tesla owners could expect the insurance to become more widely available in 2022.

Tesla first released their Telematics Insurance in Texas in October of 2021.

In December of 2021, it was expanded to Illinois.

In January of 2022, they expanded Tesla Insurance to include Ohio and Arizona.

So, Tesla Insurance is now available in a total of five states in the USA: California, Texas, Illinois, Ohio and Arizona.

There have also been rumors that they are trialing out some form of Tesla Insurance in Europe, perhaps in Spain. However on the Q4 earnings call on January 26th, 2022 it was stated that Tesla intends to try to cover 80% of the customers in the US market by the end of 2022, and then they hope to roll out in the EU starting late 2022.

How Does Tesla Insurance Work?

Unlike many standard insurance companies, Tesla Insurance works by making use of real-time data from their vehicles. This telematics provides vast amounts of information on how a driver is behaving.

Most of these elements are incorporated into Tesla’s new Safety Score which gives the driver a safety rating. The insurance premium is then adjusted according to this.

The following affect your Safety Score:

  • Forward Collision Warnings per 1,000 Miles
  • Hard Braking
  • Aggressive Turning
  • Unsafe Following
  • Forced Autopilot Disengagement

In essence, Tesla is punishing drivers who drive more aggressively. But not because they drive that way. Because the data they have statistically shows this kind of driving leads to more accidents.

So, the result is that safer drivers get lower premiums.

Tesla also takes into account which model you drive, how many cars you have, where exactly you live, and how much you drive. Just as they do with other insurers.

Is Tesla Insurance Cheaper?

There are a lot of factors that go into any insurance package, and Tesla Insurance is no different.

Tesla also uses their proprietary Safety Score (more on that below) but also your location, vehicle models and miles per year.

For many people, especially those who drive carefully all the time, it will often be significantly cheaper. I have seen examples of people saving anywhere from 25-40% per month once their safety score improves.

However, some people, especially those who have negotiated good deals from lower-priced insurers, will not always be better off.

For example, if you have multiple vehicles and other insurance like home insurance, the deal you have may trump anything Tesla can offer.

It always pays to shop around, and getting a quote from Tesla is quick and easy via the Tesla App (if you have a car already) or directly via their website otherwise.

How Does Your Safety Score Affect Your Insurance Premium?

Tesla Safety Score

Tesla updates your insurance premium on a monthly basis depending on your ongoing Safety Score. This means that you can reduce your premiums if you drive more safely and get a better score.

When you first get your Tesla Insurance your vehicle Safety Score is set to 90 (out of 100). Tesla then calculates a safety score for each drive and averages it out per day.

Over any given month, Tesla takes a 30-day, mileage-weighted average to calculate the Safety Score. They also require a minimum of five miles and connection to the wifi in order to read your Safety Score and update your premium at the end of the month.

Here are some figures from Tesla on how Safety Score affects monthly premiums each month, depending on driving scores.

MonthSafety Score
for Rating
Monthly Premium
Tesla Insurance Premium changes based on safety score per month

Below you can see some examples of how people’s insurance premiums dropped as their safety score improved month by month.

Tweet on Tesla Insurance price
Tweet on Tesla Insurance price & safety score

How Is The Insurance Safety Score Calculated?

Tesla uses the five Safety Score factors to come up with a realistic value for the overall score. The exact formula they use is constantly being evaluated and potentially updated.

According to Tesla:

Predicted Collision Frequency (PCF) formula below to predict how many collisions may occur per 1 million miles driven, based on your driving behaviors measured.

Tesla Safety Score

However, at the time of Beta release, the Safety Score formula was as follows:

Predicted Collision Frequency (PCF) = 0.682854x1.014495 Forward Collision Warnings per 1,000 Miles
 x1.127294 Hard Braking
 x1.019630 Aggressive Turning
 x1.001444 Unsafe Following Time
 x1.317958 Forced Autopilot Disengagement
Safety Score Factors used in the calculation

Note From Tesla: The current formula was derived based on statistical modeling using 6 billion miles of fleet data. We expect to make changes to the formula in the future as we gain more customer and data insights.

The PCF is converted into a 0 to 100 Safety Score using the following formula:

Safety Score = 115.382324 – 22.526504 x PCF

Note: Safety Score has also been used to allow more drivers into the FSD Program

Leave a Comment

Malcare WordPress Security