Tesla’s insurance plans could be available in three new states, Forbes has reported. Those states are Texas, Illinois, and Washington. The article noted that insurance regulators in Illinois and Texas have already approved the rates and policies for Tesla Insurance and that Washington has approved the initial forms.
However, the coverage isn’t yet for sale in the new states and it’s not known when Tesla will begin offering the policies. In Texas, Tesla will offer insurance auto insurance through Redpoint County Mutual Insurance Co. In Illinois, Tesla’s partner will be Midvale Indemnity Co., which is a subsidiary of American Family Insurance. And in Washington, Homesite Insurance Co. will be Tesla’s partner. Homesite, which is also a subsidiary of American Family, filed back in January with state regulators to underwrite Tesla Insurance.
Tesla’s Impact On The Insurance Industry Is Coming
Forbes interviewed Tom Super, who is the vice president of insurance intelligence at J.D. Power. Super noted that Tesla’s insurance offering “could represent a viable long-term threat” to auto insurance leaders such as GEICO, Progressive, State Farm, and Allstate.
Warren Buffett, who once stated that he’d bet against any company in the auto business and who recently invested billions in Chevron, has a huge stake in GEICO. Hyperchange’s Gali Filche actually examined Buffett’s stake in GEICO and just how GEICO may be affected by Tesla Insurance.
“We think the impact is going to start happening right now. In fact, Tesla’s already begun offering its own insurance product. Because of their new Autopilot features, their cars are much safer than anything else on the road. Legacy insurance companies are slow to react to this and adjust the rates. Therefore, Tesla had to step in and create their own customized insurance product to accurately reflect the risks and safety of their vehicles,” Gali said in his video.
Super told Forbes that the viable long-term threat would be determined by how quickly Tesla scales up its vehicle production and sales. “This will largely be determined by how quickly their vehicles penetrate the market and begin to make up a significant portion of vehicles on the road,” he said. “In the near term, however, Tesla’s entry into the auto insurance market will have limited impact on the average auto insurance consumer, including the premiums they pay.”
Forbes also spoke with Bob Hunter, director of insurance at the Consumer Federation of America. Hunter agreed that Tesla’s insurance would have little competitive effect overall on insurance premiums — for now. He noted that Tesla is one of several automakers getting into auto insurance.
Putting Insurance Giants On Notice
In Q2 2020, Tesla put the insurance industry on notice when Elon Musk spoke on the Q2 2020 Tesla earnings call. “We’re building a great, major insurance company. If you’re interested in building a revolutionary insurance company, please join Tesla. Especially if you want to change things. This is the place to be. We want revolutionary actuaries.”
Tesla, which is developing its own telematics, noted that it will allow owners to add their vehicles to its own ride-hailing app and that insurance coverage will be provided to all of the drivers/vehicles using Tesla’s network (presuming its permitted in those places).
Some Tesla owners are already reaping the benefits of Tesla Insurance. Fast Company stated that, “They are also helping to fundamentally change the way that we interact with insurance providers. In the future, insurers will be more like a partner on our journey both by car and on foot — both on Earth and beyond.”
Average insurance rates for a $35k vehicle in BC are $1300/year.
15% of that amount is $195, divided by 12 months is $16.25/month.
I pay $2100/year for my Tesla Model 3 currently which would be $315/year in savings or $26.25/month.
— Unapologetically Apologetic 🇨🇦 (@CascadiaDream) January 16, 2021
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