Jackie LoVerme Vice President of Strategic Partnerships | Insurify
Tesla Insurance experienced increased financial losses in the second quarter of 2024, with its loss ratio rising from 99.8% to 107.4%, according to P&C Specialist. This rise is attributed partly to the high costs associated with repairing electric vehicles (EVs). The average repair cost for an EV stands at $6,066 compared to $4,703 for gas-powered vehicles.
Customer dissatisfaction appears to be another contributing factor. A Reuters report highlighted common complaints among Tesla Insurance customers, such as prolonged claim and repair times and difficulties in contacting adjusters. Some drivers reported making loan payments on totaled vehicles, and the company holds a Better Business Bureau rating of "F" due to unaddressed complaints.
Insuring a Tesla Model Y averages $319 per month for full coverage, as per Insurify data from other mainstream insurers. High premiums are linked to factors like higher labor and part prices, limited part availability, and a shortage of qualified technicians.
Tesla Insurance aimed to offer affordable coverage with estimated savings of 20%-30% for Tesla drivers while promising quick service including "same-day" collision repairs. However, some customers have faced long waits for adjuster responses, repairs, and payouts.
The insurance uses a telematics-style system embedded in vehicles to track driving behavior and set rates based on the Tesla "Safety Score," which considers factors like collision warnings and speed. Premiums can vary monthly based on this score.
A class action lawsuit filed in September 2023 alleges that Tesla Insurance charges inflated premiums due to false collision warnings. The case is proceeding despite attempts by Tesla to dismiss it.
Despite these challenges, Tesla Insurance reported significant growth with $497 million in written premiums earlier this year. Matteo Carbone from the IoT Insurance Observatory noted that rapid premium growth does not necessarily indicate success: “To grow when you sell the same product at half of the price (or less) than what is charged by the market isn’t too difficult,” he said. “But then Tesla is underpricing the risks in order to reduce the cost of ownership of the vehicle.”
Users on forums have reported rapid rate increases; one Reddit user claimed their rate rose by 45% after six months without any claims or incidents.
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