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How Much Does Tesla Insurance Cost?

Tesla CEO Elon Musk says, “Great companies are built on great products,” and Tesla has become the world’s largest electric-vehicle manufacturer by creating a solid lineup of captivating models.

With interest in EVs making a huge surge this year, Tesla vehicles are at the top of consumers’ shopping lists. Along with vehicle price, insurance cost is another key consideration when researching the pros and cons of Tesla ownership.

How Much Is Insurance on a Tesla?

Teslas are expensive to insure, with average yearly cost estimates as high as the low $3,000s to the mid $4,000s adjusted for the most expensive states to insure in. This is in steep contrast to the national yearly average of roughly $1,500 for auto insurance.

Comparing quotes from multiple insurance providers, including owner-exclusive Tesla Insurance, and having an awareness of discounts and incentives can help significantly lower premiums. Insurance prices also vary greatly based on the model and trim level chosen.

Tesla model sticker prices with average yearly insurance cost:

  • Model 3 – $37,990, $2,230
  • Model Y – $41,990, $2,600
  • Model X – $89,990, $3,800
  • Model S – $79,990, $3,600

The super-quick Model S Plaid+ version with a $139,990 price tag is the lineup’s most expensive and priciest to insure.

The Model 3’s status as the world’s best-selling pure-electric vehicle makes it the logical focus for any discussion on Tesla inurance and how much it costs.

How Much Is Insurance on a Tesla Model 3?

Estimated average yearly insurance rates for a Model 3 range from about $2,220 to $2,800. Importantly, Tesla insurance premiums vary drastically by states. For instance, the average annual insurance rate for a Model 3 is about $1,469 in Massachusetts and $2,598 in Maryland.

Variances in population densities, insurance laws, costs of living and natural-disaster risks factor into state insurance costs. Age is another major element, which is assessed along with driving history, marital status and location (urban vs. rural). The average yearly Model 3 rate for 20-something-year-old drivers is about $1,285 more than those in their 40s.

Why Are Tesla Insurance Costs So High?

  • Repair cost – influenced by several factors, is the main reason Teslas are more expensive to insure.
  • The scarcity of Tesla-accredited body shops – requiring trained workers and specialty tools, eliminates taking the vehicles to less-pricey shops.
  • Teslas are surrounded by ultrasonic sensors, cameras and radar – this complex sensor suite includes expensive hardware that requires precise calibration to ensure reliable protection.
  • Tesla’s use of unibody construction and aluminum – results in high repair costs. Use of aluminum varies with vehicles. The Model 3, for instance, has more steel than the top-end Model X and S.
  • A significant cost comes when a battery pack is damaged – Current Automotive, a pre-owned EV retailer, says a Model 3 battery pack replacement costs $13,500.

When shopping for the cheapest Tesla insurance, focus on providers that reward eco-friendly driving and advanced safety features, and have created specific discounts and policies for EV owners.

Also, do research on government incentives, which Self Financial, Inc. reports “vary per state, from nothing to almost $700 in some areas, but there are electric-vehicle subsidies to be found if you look hard enough.”

Shopping for the Best Deal on Tesla Insurance

Getting the cheapest price on Tesla insurance requires research and comparing quotes from multiple providers. Among the large national insurance companies, Progressive, Travelers, State Farm and Geico generally offer the cheapest Model 3 insurance. 

InsuranceQuotes can put you on the fast-track to getting the best quote from these providers and more.

Another company, Tesla Insurance, is evolving toward providing the most affordable rates. It’s only available to Tesla owners in California, but soon will expand to Texas — home of its new Austin manufacturing facility.

Tesla reports its insurance is a “competitively priced insurance offering, designed to provide Tesla vehicle owners with up to 20 percent lower rates and, in some cases, as much as 30 percent. 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 come standard on all new Tesla vehicles.”

Tesla Insurance isn’t the cheapest insurance, but, depending on model and trim, usually ranks near the top among best-priced policies. An important way in which Tesla Insurance stands apart from others is the offering of an Autonomous Vehicle Protection Package.

This package includes:

  • Autonomous Vehicle Owner Liability – for property damage or bodily injury if the car gets in an accident during Autopilot operation
  • Wall Charger Coverage – providing up to $3,000 for loss or damage to the charger
  • Electronic Key Replacement covering up to $500 for loss of an electronic key
  • Cyber Identity Fraud Expenses paying up to $15,000 in digital identity fraud losses per occurrence and up to $30,000 per period if driver information is compromised

The Future of Tesla Insurance from Texas to California

Tesla Insurance filings to the Texas Department of Insurance indicate the new Texas program expands on California offerings and suggests progress toward Musk’s pledge to build a “major insurance company” fueled by “revolutionary actuaries,” reports SPG Global, quoting from the Tesla actuarial memorandum:

“The purpose of the product is to use the technology in vehicles to lower costs and improve the customer experience through automated underwriting, rating and claims, including direct data feeds with customer permission that eliminate frictional costs and inefficiencies inherent in traditional insurance processes. The use of vehicle and consumer data, with the consumer’s affirmative consent, will allow for lower costs to acquire and service the policyholder.”

Additionally, Tesla has agreed to provide parts to accredited body shops in Texas at a discounted rate, leading to a 15 percent discount in the cost of repair. Tesla Insurance also partners with Dallas-based Redpoint County Mutual Insurance Co., which gives it the advantage of selling directly to customers, and offering full coverage cheaper than the state’s leading insurance companies.

“Obviously, somebody does not have to choose our insurance,” SPG Global reports Musk saying during a conference call. “But I think a lot of people will. It’s going to cost less and be better, so why wouldn’t you?”

Closing the Circle on Tesla and Other EV Insurance

The electric vehicle market is set to hit the mainstream this year, reaching far beyond Tesla. This will not only lead to more competition in EV sales and pricing, but also more competitive options to insure your EV at the best possible price.

Make sure to use tools that will allow you to get multiple quotes, so you are sure to get the coverage you want for a price that won’t put a dent in your wallet.

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