Tesla takes charge of insurance

As the configuration and upgrade complexities of Tesla’s electric vehicles (EVs) don’t fit conventional insurance plans, Tesla has now entered the car insurance business to meet its EV insurance requirements.

This makes sense as the company strives to be a total mobility and energy solution.

In addition, Tesla’s software-upgradeable features also don’t fit current insurance templates. For example, if a Tesla Model S 60 with a 60kWh battery is purchased, the actual battery capacity in the car is 75kWh, but it’s not accessible without an upgrade. It can be turned on by paying $9,000 for an upgrade, but a conventional insurer would have no way of knowing about the change.

Autopilot can also be turned on at a later time by paying for an upgrade, which some insurers might view either more or less favorably depending on their understanding, experience, and underwriting policies for driver assistance features.

At first, the insurance for Tesla vehicles only is going to be offered to Tesla owners in Australia and Hong Kong, with Tesla partnering with QBE Insurance and AXA General Insurance respectively. According to Electrek, Australia Tesla owners have been offered InsureMyTesla plans priced starting at $900 a year.

In the past, Tesla owners discovered they were being charged for vehicles with power and trim levels that differed from what they actually owned. Owners charged for greater levels were paying too much, while those charged for incorrect lower levels weren’t getting the required coverage.

The InsureMyTesla plan will have some unique features such as if a totalled vehicle is less than 36 months old, insured owners will get a new vehicle of the same model and series; any driver of the vehicle is insured; Tesla Home Wall connector damage is covered; and owners can choose any authorized Tesla repair facility for repair of damaged vehicles.

The insurance industry in general, government regulators, and the automotive industry all expect that once self-driving cars become common, the numbers of crashes and fatalities will be slashed. Driver error figures in 90% of all accidents today according to the US National Highway Traffic Safety Administration.

In a few years level 4 (mostly self-driving) and level 5 (totally self-driving) vehicles will be more prevalent, and insurance companies will need to make many adjustments.