Tesla Turns Car Accident Insurance Upside-Down

  • Tesla has created a customised car accident insurance package, InsureMyTesla, that is cheaper than traditional plans because it factors in the vehicles’ Autopilot safety features and maintenance costs.
  • InsureMyTesla has been available in 20 countries, but Tesla just recently partnered with Liberty Mutual to make the plan available in the US.
  • InsureMyTesla shows how the insurance industry is bound for disruption as cars get safer with self-driving tech.

Tesla struck a deal with Liberty Mutual to create a customised car accident insurance package — and the move shows how the electric automaker is intent on disrupting the insurance industry.

The new plan is called InsureMyTesla and was designed specifically for Tesla vehicles. Its benefits include replacing Teslas damaged beyond repair within one year. Tesla launched the package on October 13 in the US in all 50 states, but it already exists in 20 other countries, a company representative confirmed.

esla started quietly rolling out the InsureMyTesla program in February in Hong Kong and Australia. The electric car maker partners with different insurance companies across the globe to offer InsureMyTesla, which lowers overall insurance costs by factoring in the vehicles’ Autopilot safety features and maintenance costs.

Tesla CEO Elon Musk has said that insurance agencies should adjust their prices for Tesla vehicles because the cars come with Autopilot, the company’s advanced driver-assistance feature.

The National Highway Traffic Safety Administration found that crash rates for Tesla vehicles have plummeted 40% since Autopilot was first installed. Electric vehicles also generally require less maintenance then traditional, gas-powered vehicles.

“If we find that the insurance providers are not matching the insurance proportionate to the risk of the car then if we need to we will in-source it,” Tesla CEO Elon Musk said in February.

Tesla’s partnership with Liberty Mutual marks the first time the InsureMyTesla package has been available in the US. The US launch comes a few months after AAA said it would raise ratesfor Tesla owners after seeing a high frequency of claims among Model S and Model X owners.

AAA based its decision based on data provided by the Highway Loss Data Institute, an analysis that a Tesla spokesperson said was “severely flawed” at the time.

The deal with Liberty Mutual shows how US agencies are starting to realise that they must adjust their prices as cars get safer with advents in self-driving tech.

Insurers like Cincinnati Financial, Mercury General, and Travellers have noted in SEC filings that driverless cars could threaten their business models, according to a 2015 Bank of America and Merrill Lynch report.

The personal car accident insurance sector could shrink to 40% of its current size within 25 years as cars become safer with autonomous tech, according to a report by the global accounting firm KPMG.  The question is, which NZ insurer will be the first mover to innovate car accident insurance adapted to the promise of crash-free autonomous cars?

Tesla says it also hopes to one day bundle the price of insurance and maintenance into the price of future vehicles. “It takes into account not only the Autopilot safety features but also the maintenance cost of the car,” Jon McNeill, Tesla’s vice president of sales and services, has said of InsureMyTesla. “It’s our vision in the future we could offer a single price for the vehicle, maintenance, and car accident insurance.”

2 Responses

  1. Broker 1979
    | Reply

    We’re certainly heading into new space with this. If Tesla and ultimately other car manufacturers follow suit and underwrite their own product it will be a game changer for the broker sector and the wider insurance industry. It’s a very real concern. IF AND WHEN autonomous cars are truly impact avoiders there will be no need for MV insurance at all. Despite claims to the contrary underwriters do quite well from MV , and of course the specialist motor underwriters will be hit very hard. Interesting times. We’ll watch this space.

  2. Tui Kane
    | Reply

    Anything that reduced traffic accident rates is a positive and all options need to be looked at. We have started modernising our fleet to include better safety features and this has made a big improvement. I can’t see us including Teslas in the fleet any time soon but understand that autonomous driving technology is the next big step for vehicle safety so will be watching with interest. Hopefully central and local government will pave the way!

    Government must also take some responsibility for increasing the uptake of safer vehicles including financial incentives – it would be effective and also far outweigh the economic and social cost of vehicle injuries and fatalities. Come on Labour/Greens coalition, time to take the initiative on something meaningful!

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