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Tesla's discount car insurance coming to more states — should you hop on?

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Tesla's discount car insurance coming to more states — should you hop on?
Tesla's discount car insurance coming to more states — should you hop on?

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 recently announced plans to bring his discount car insurance to Texas later this month and New York next year before expanding to more states and even internationally.

Tesla Insurance is already available in California, and the company says drivers who switch are saving up to 30%, which can equal hundreds of dollars a year.

While that number certainly demands attention, it also doesn’t mean Tesla Insurance is automatically the right choice for you.

Are you part of the club?

A Tesla Model S interior
Courtesy of Tesla, Inc.

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 big discount on car insurance.

And while Musk plans to offer his in-house insurance around the globe someday, he acknowledges that it’s been slow going so far. The company is also working on entering Illinois and Washington, according to media reports.

“The regulatory process for approval to offer insurance is extremely slow and complex, varying considerably by state,” he wrote on Twitter last month.

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.

Why you might switch to Tesla Insurance

Smiling man working on laptop in modern office lobby space.
insta_photos / Shutterstock

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.

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.

Why you might pass on Tesla Insurance

Close up of phone with taxi, rideshare or public transportation mobile app open.
Tero Vesalainen / Shutterstock

While the company is enthusiastic about its use of data, Tesla Insurance is only using anonymous information pulled from a wide pool of drivers.

“Tesla Insurance does not currently use data from individual vehicles, such as GPS or vehicle camera footage,” the company says. “We plan to expand the product offerings to incorporate more types of data over time.”

It’s a strange omission, considering many traditional insurers already offer discounts based on tracked driving habits. It means safer drivers aren’t yet able to directly benefit from their habits behind the wheel.

For now, a model Tesla driver has to pay the same rate as a daredevil who hammers the accelerator, makes hairpin turns and brakes at the last minute — that is, assuming no one actually gets in an accident.

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.

How all drivers can save on insurance

Woman signing a car insurance policy, the agent is pointing at the document
Stokkete / Shutterstock

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. 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.

The more debt you have, the more likely it is you’ll pay a high price for insurance, so try some tactics to get out of debt faster.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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