Tesla plans to offer auto insurance to California residents that drive its vehicles, charging lower rates because of the safety features on its cars.
Tesla Founder and CEO Elon Musk has often commented that auto insurance rates should drop substantially with the use of driver-assist and self-driving technology. The company claims that its Model 3 Sedan had the lowest probability of injury among vehicles tested by the National Highway Traffic Safety Administration, but the agency said Tesla was making misleading statements and sent Tesla a cease-and-desist letter over the claims.
While the vehicles might lead to fewer injuries, that doesn’t make accidents cheap. Because of their expense and sophistication, Teslas are among the most expensive vehicles to repair, which makes their insurance rates among the highest.
A 2018 review by financial research provider 24/7 Wall St., analyzing claim frequency and insurance cost data by the Insurance Institute for Highway Safety, ranked the Tesla Model S and Model X at the top of the list of most expensive vehicles to insure.
Tesla said it would offer “comprehensive coverage” and claims processing to customers in California, and that it would expand to additional U.S. states in the future.
Its insurance pricing also cuts out certain fees that traditional insurers charge, Tesla said. The nature of those fees is unclear.
It’s also not known if Tesla will insure against spontaneous combustion, which has occurred in Teslas when their batteries malfunctioned and suddenly caught fire.