A Tesla Model 3 owner just received a renewal notice for her Tesla insurance with some pretty good news: Tesla is lowering her premium. Tesla Joy, a popular YouTuber who often vlogs about her Model 3, shared some good news about her Tesla insurance premium on Twitter today.
Got an email from Tesla Insurance and I had to read it twice. They’re lowering my premium a bit. Not much, but this is 1st time auto insurance has ever lowered my premium on their own. I wonder if they would waive a month’s premium like other companies due to COVID-19 lockdown? pic.twitter.com/3vJ7XeyikO
— Tesla Joy (@TeslaJoy) April 10, 2020
In the Notice of Renewal, the email reads that the premium of $767.24 for a 6 month period will change to $758.49. $8.75 may sound small, but if you multiply that by 2 to get the annual savings, that equals $17.50 in annual savings. Okay, that’s still not much money, but it’s relevant because of how unusual it is — and broader implications.
When Tesla came out with its insurance program, there were mixed reviews, but it makes sense for Tesla to provide a way for its customers to insure their vehicles at a lower rate. The average cost of insuring a Tesla ranges from $1,913 to $2,963 per year, depending on model, among many other things.
This is mainly due to the repair and maintenance costs of Tesla vehicles and the fact that there are a limited number of Tesla-approved body repair shops. So it makes sense for Tesla to provide its customers with alternative insurance that would benefit both the customer and Tesla. It provides Tesla another stream of revenue and often gives customers a lower-cost option for insuring their vehicles.
@elonmusk can we please get @Tesla insurance here in MN? https://t.co/lmza9qXxJS
— Dan Burkland (@dburkland) April 10, 2020
Hopefully, Tesla will soon expand its insurance program to include other states, and eventually other countries.
https://twitter.com/ajtourville/status/1248420542178160641
Tesla’s lowering its customers’ insurance premiums shouldn’t be confused with other insurance companies giving their customers coronavirus credits. Several companies, such as Allstate, Geico, and USAA, are issuing refunds or policy rate cuts to drivers who may be staying home due to shelter-in-place orders. Allstate plans to give its customers more than $600 million in April and May. USAA is dishing out $520 million.
The difference between these and Tesla is the fact that Tesla is able to collect data from its drivers’ driving behaviors — and use the data in aggregate to adjust policies and pricing. Tesla can estimate the risk of an accident along with estimates on repair costs quicker and better than competing insurance companies.
With the collected data, it makes sense that Tesla is able to lower an owner’s premium. This is why Tesla’s entrance into the insurance industry last year was so important for the company. It’s actually a game changer — not just for the insurance industry and Tesla customers, but for Tesla as well.
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