Tesla Insurance is expanding to two new states, Virginia and Oregon, Drive Tesla Canada reports. The article noted that the policies in both states will be underwritten by Tesla General Insurance for the first time.
Earlier this year, Tesla expanded its insurance to Arizona and Ohio, which was something Sawyer Merritt predicted in an interview with Dave Lee on his YouTube channel “Dave Lee on Investing.” Sawyer also tweeted that a source told him that by the end of Q1 2022, a total of eight states will have Tesla Insurance. Oregon and Virginia bring the total number of states with Tesla Insurance up to seven. The states with Tesla Insurance including the new states are:
In another article, Drive Tesla Canada pointed out the possibility of New York being one of the eight states to receive Tesla Insurance during Q1. One of the benefits of Tesla Insurance is that Tesla owners don’t have to pay extreme prices for insuring their vehicles. MarketWatch reported earlier this month that one of the cons of owning an EV is that they are more expensive to insure and repair. The article was more or less focused on EVs as a solution to the rising gas prices.
Tesla is challenging the more-than-100-year-old auto market, but it’s also challenging the insurance industry, which the author noted is even older than the auto market. With insurance premiums being based on damage and repair histories, and EV parts such as semiconductor chips being hard to source, most insurance companies probably find it less profitable to insure an EV than a typical gas car. Especially since EVs are still a small part of the market and have fewer components than traditional ICE vehicles.
Bradley Lane, an urban planning professor in the School of Public Affairs and Administration at the University of Kansas, told MarketWatch:
“There’s a lack of data or experience with insuring and fixing EVs.
“This relative inexperience with the potential full range of things that can go wrong or be replaced encourages insurers to hedge their bets against potentially large, but not-yet-experienced, payouts for claims.”
The article also included data from CCC Intelligent Solutions which found that the average cost of repairs is around 3% higher for a small EV than a small ICE vehicle. You can view that report here.
It’s important for Tesla’s mission that it solves this problem, and it is doing so with its own insurance platform. Tesla is able to collect the driver’s data and use that to design premiums that are fair and based on data rather than a history of collisions and repairs alone.
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