Cheap Insurance for Tesla Model 3

  • Craig Fitzgerald
  • 8/18/2020

The Tesla Model 3 is unique in many ways. One of the not-so-discussed ways is that Tesla actually provides insurance to compete with the GEICOs and Progressives of the world. Here we will compare rates and find out who has the cheapest insurance for a Model 3.

Who has the best cheap insurance for my Tesla Model 3?

  • Cheapest Large Insurance Carrier: Progressive. In the quotes we looked at, Progressive came in as the number one price leader.
  • Best Insurance in All 50 States: GEICO or Progressive. Either of these two insurance behemoths is going to be competitively priced, and it’s also going to be able to offer its services in all 50 states.
  • Best Service: State Farm. State Farm not only offers competitive prices, but it has a captive agent network. When you talk to anyone from State Farm, you’re talking to someone who actually works for that company, not some schmoe who sells insurance along with knife sharpening services.

Tesla Insurance: Where it’s offered and why Tesla?

At the moment, you’re not going to get insurance for your Tesla in all 50 states. This is a relatively new program that launched in August of 2019, and as of publication of this article (Summer of 2020), it’s only available in California. That may seem like a major issue, but Tesla sells 45% of its vehicles in the Golden State. It’s a huge market opportunity and a great test case for rolling out its own insurance plan.

According to the Tesla Insurance landing page, “Tesla Insurance is a competitively priced insurance offering designed to provide Tesla vehicle owners with up to 20% lower rates, and in some cases, as much as 30%.”

Aside from that potential cost savings, why would you want Tesla Insurance? The company attempts to answer that in its marketing:

“Tesla uniquely understands its vehicles, technology, safety, and repair costs, and eliminates fees taken by traditional insurance carriers. Tesla Insurance pricing is reflective of Tesla's active safety and advanced driver assistance features, which comes standard on all new Tesla vehicles.”

Tesla also famously knows a lot about its drivers and its cars because it collects a ton of data, and uses it frequently. One would think it would be utilizing that data as a means of delivering some kind of usage-based insurance product like Progressive’s Snapshot, but that’s not the case. To quote Tesla’s marketing materials:

“We use anonymized, aggregated data to inform our insurance rates, such as including the benefits of Tesla's active safety and advanced driver assistance features. Tesla Insurance does not currently use data from individual vehicles, such as GPS or vehicle camera footage. We plan to expand the product offerings to incorporate more types of data over time.”

The other thing to understand is that at the moment, Tesla isn’t underwriting its own insurance policies. According to filings with the State of California, Tesla Insurance is managed by Tesla, but the underwriting is provided by State National Insurance.

Is insurance for the Model 3 through Tesla Insurance cheaper?

We’re going to put disclaimers all over this next few paragraphs and our table, because it’s impossible to get a quote through Tesla Insurance without actually owning a Tesla. We’re relying upon a lot of anecdotal information that was provided through various sources for this table.

Note that ALL of these quotes were strictly for the state of California, so comparing insurance quotes with your own state will vary greatly. We’re only trying to provide a guide on whether it’s financially wise to insure through Tesla in California.

Finally, there are a million things that are going to impact the cost of insurance, so keep that in mind.

Rates we found reported online (annual)Average (annual)Adjusted average* (annual)
Tesla$1500, $2460, $3,439, $6,600 $7,200$4,240$4,166
Progressive$608, $702, $781, $803, $2,376$1,053$760
Geico$936, $1480$1,280N/A
State Farm$606, $964, $976, $1,100, $1,700$1,069$1,013
Ameriprise$780, $1937$1,359N/A
Amica$1,600, $1284$1,442N/A

(*) The “adjusted average” is computed by eliminating the highest and lowest values and averaging the remaining values.

What’s clear here is that Tesla Insurance quotes -- especially those obtained by Tesla owners early on -- was significantly more expensive than competitive insurance companies.

How can you get insurance discounts?

Insuring a Tesla is no different than insuring anything else, and all those little discounts can really start to add up. You should be aggressive about asking your agent if any of these discounts apply:

  • Pay in full: Both GEICO and Progressive offer discounts for writing a check to cover the entire cost of your insurance in one shot. It’s definitely worth your while to do that if you can afford to.

  • Maintain Good Credit: Depending on what state you live in, you can recognize some pretty substantial insurance savings if you maintain a good credit score. Using a credit score to punish you with higher rates is illegal in several states, though.

  • Safety features: The Model 3 is bristling with advanced safety equipment even at the base level, so you have every opportunity to realize some savings here. In fact, when you add up all the discounts here, you may be surprised to find that insuring the Model 3 is no more or less expensive than any other car.

  • Drive less: Most people are driving 15,000 miles per year or more. But as we found out during the pandemic, insurance companies were providing rebates to consumers because they simply weren’t driving at all. If you can work from home even a couple of days a week, you can drop your mileage significantly and get some pretty great savings along with the electricity savings by not driving.

  • Drive carefully: Your Model 3 is designed to prevent you from getting into accidents. Those features can really help you avoid getting surcharged for accidents in the future. It won’t help you avoid tickets, though, so do your best to stick close to the posted speed limits.

FAQ

How much is insurance on a Tesla Model 3?

Through a conventional insurer, we found rates in the $1,200 to $1,500 range. Insuring through Tesla’s captive insurance program was significantly higher when the program launched.

Why would I spend more to insure through Tesla Insurance?

The short answer is probably concierge service. If Tesla is going to ring you up for that much more for your annual insurance, there’s a service component to it that you’re not going to receive from your regular insurance company.

There’s another thing to think about, too. Tesla offers several features that most OEMs don’t, such as autonomous features. According to Tesla, it not only insures the vehicle while it’s being driven autonomously, it also provides Autonomous Vehicle Owner Liability, Wall Charger Coverage, Electronic Key Replacement, and covers Cyber Identity Fraud Expenses.

HOWEVER, that coverage is optional, and you’ll pay more on top of insurance that’s already reported to be more expensive.

Why is insurance for my new Tesla Model 3 more expensive than with my last car?

Well, if your last car was a 1999 Oldsmobile 88, your answer is that the Tesla costs more, and therefore costs more to insure. But it’s not THAT expensive. You can buy a Model 3 in the $35,000 range, and that’s not much more than your average crossover costs these days. If you’re experiencing a huge jump in insurance cost by switching out of a late model car into a Model 3, it’s definitely time to shop around, because the rates we found weren’t much more expensive than a competitive car.

How can I get super cheap insurance for my new Model 3?

You want to be careful buying the super-cheapest insurance you can. There’s a lot of caveats to doing that. There essentially are no aftermarket replacement parts for the Model 3, so the insurer is going to have to pay for OEM parts to repair it. If they’re going to give you a hard time doing that, then the $150 a year you save between one insurance company and another is going to seem like it wasn’t worth it at all.

Is a lower trim level of the Tesla Model 3 cheaper to insure?

Not really. All of the things that add up to the cost of insuring a Model 3 like advanced safety equipment are part of every Model 3 from the base level.

Why is my insurance so high with no accidents?

Chances are good that you live in a major metropolitan area. Insurance is going to be much more expensive depending on your location.

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