Tesla Gambles on Offering Discounted Car Insurance on Its Vehicles

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One issue in calculating the cost over any automobile’s life is the car insurance rates. The cost to buy a car, to keep it fueled (or charged) up and the cost of wear and tear are the first priorities for many drivers. But that the pesky car insurance just has to be considered.

Tesla Inc. (NASDAQ: TSLA) is not a traditional car company. On top of wanting to skip the traditional car dealership model and sell directly to the public, Tesla announced that it is going to start selling car insurance on its own vehicles.

Tesla Insurance was announced as a competitively priced insurance offering. The company is claiming that Tesla owners will see savings against traditional insurance with up to 20% lower rates. In some cases that saving could even be 30%.

There is of course a catch. Tesla’s announcement indicated that the comprehensive coverage and claims is only being offered to customers located in California, and that the insurance offering will expand to additional U.S. states, in the future.

The company’s news release said:

Because Tesla knows its vehicles best, Tesla Insurance is able to leverage the advanced technology, safety, and serviceability of our cars to provide insurance at a lower cost. This pricing reflects the benefits of Tesla’s active safety and advanced driver assistance features that come standard on all new Tesla vehicles.

Tesla said that its car owners in California can purchase a policy online at the Tesla site in as little as one minute. For new Tesla orders, the company noted that its customers can request a quote before delivery once a vehicle identification number (VIN) has been assigned.

It’s not normal to see a car manufacturer compete with insurance companies to potentially help sell cars. Then again, what’s normal about anything related to Tesla any longer. Taking an economic risk on a car is one thing. Selling the car and taking on risks about the drivers after the car company sells those cars, that’s entirely different.


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