Is Tesla Insurance Worth the Price? (Plus Cheaper Options)

Tesla’s are much more expensive to insure than other cars, but you may be able to save money by shopping around.
Last updated Aug. 25, 2022 | By Kat Tretina | Edited By Michael Kurko
Tesla roadster

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If you’re considering buying one, you may be asking yourself, is a Tesla worth it? The cheapest car, the Tesla Model 3, starts at $42,690.

In addition to their purchase price, car insurance costs for Teslas are greater than that of other vehicles. On average, it can cost more than double to insure a Tesla than a standard gas-powered car.

Fortunately, Tesla now offers its own insurance for its high-tech electric vehicles. We’ll look at whether Teslas Insurance is worth it and what other car insurance options might be better for your needs and budget.

In this article

What’s different about insuring a Tesla?

In recent years, Tesla has become enormously popular. Currently headed by CEO Elon Musk, the company delivered 936,222 vehicles in 2021. Its revenues for the year totaled $53.82 billion, a 71% increase compared with 2020.

Before you head to a Tesla store, make sure you consider the cost of auto insurance. When it comes to your typical car, the average cost of car insurance is $1,483 per year. However, coverage for Teslas is substantially more expensive. Why? There are several reasons:

  • Luxury: With their high price tags, Teslas are considered luxury cars. Although the Model 3 starts at $42,690, other Tesla models have much higher price tags, such as the Model X, which starts at $109,690. As luxury vehicles, Teslas will be more expensive to insure than your typical coupe or sedan.
  • Complex technology: Teslas boast high-tech systems, including its touch screen display, electric powertrain, and autopilot features. If the car is damaged and needs repairs, finding technicians that are able to work on those systems can be difficult — and expensive.
  • Body shop limitations: Not all body shops are equipped to work on Teslas, so you’re limited to Tesla-approved shops.
  • Coverage needs: With their high price tags and complex electronics, a Tesla isn’t a car to skimp on with insurance. To properly protect yourself and your vehicle, you’ll need comprehensive and collision insurance coverage with fairly high limits, typically more than state-minimum coverage.

How much does it cost to insure a Tesla?

Along with its high purchase price and the cost to charge a Tesla, be prepared to pay a higher rate for insurance.

When it comes to insurance costs, several variables affect your premiums. Insurance premiums vary by location, age and gender of the driver, driving record, typical use, and deductible.

The average annual premium for all Tesla models is $3,216 — 116% higher than the cost to insure other cars. However, average premiums vary by model.

Here is the average insurance premium for a Tesla by model:

  • Model 3: $2,578
  • Model S: $3,513
  • Model X: $3,284
  • Model Y: $3,087

What is Tesla Insurance?

In 2019, Tesla entered the car insurance business by launching its own insurance product for its customers. Designed in an attempt to lower the cost of ownership, Tesla Insurance offers comprehensive insurance to Tesla owners in select states.

According to the company, its premiums are 20% to 30% lower than what other insurance providers offer, which makes it more affordable to insure your Tesla.

Through Tesla Car Insurance, you can get a policy for your new Tesla. To view coverage details or to get a quote, you must go through the Tesla mobile app. Coverage options include:

  • Glass: Tesla’s glass insurance protects you with coverage for repairs or replacement of damaged glass, including your windshield, side windows, and rear window.
  • Accident or collision: If your vehicle is damaged in an accident with another vehicle or stationary object, accident or collision coverage will provide coverage for its repairs.
  • Comprehensive: Tesla’s comprehensive insurance is separate from its glass coverage. It covers damage to your vehicle that occurs for reasons other than accidents, such as theft, storms, or wild animals.
  • Roadside assistance: Roadside assistance provides you with towing assistance if your car isn’t driveable due to a flat tire, failed battery, or an unexpected breakdown.

How does Tesla Insurance work?

Tesla Insurance stands out for its use of real-time driving monitoring, otherwise known as telematics. Other insurance companies use a plug-in device to track your driving habits, but Tesla uses its built-in technology to track your driving behavior. It then uses that data to determine your premiums. The better driver you are, the lower your premiums will be.

Based on your driving habits, Tesla will assign you a Safety Score, a concept that is still in beta. Your Safety Score is a number between 0 and 100, with higher numbers indicating a safer driver. The Safety Score is based on five safety metrics: forward collision warnings, hard braking, aggressive turning, unsafe following, and forced autopilot disengagement.

All users are given a Safety Score of 90 at first. Over time, your score can change as Tesla gathers data about your driving habits. If your score changes, so will your premium. Your Tesla Insurance premium can adjust monthly based on your Safety Score, but Tesla will notify you in advance of any premium changes.

The Tesla Insurance program is only available to residents of the following states:

  • Arizona
  • California*
  • Colorado
  • Illinois
  • Ohio
  • Oregon
  • Texas
  • Virginia

* Insurance using real-time behavior not available.

How do I submit a claim?

After purchasing a policy through Tesla Insurance, you can manage your coverage, make payments, and submit claims through its mobile app.

You can submit a claim 24/7, and Tesla will help you find a Tesla Service Center, Tesla Collision Center, or Tesla-approved collision center near you.

To file a claim, you can use the app to submit details about the incident and contact information of other parties involved or witnesses. Tesla will prompt you to take and submit photos of your car through the app.

After submitting a claim, a Tesla Claims Adjuster can help you get an estimate for repair costs or reserve a rental vehicle.

Tesla recommends that policyholders use the apps for all claims, but you can also call the Tesla Claims team at 1-844-34-TESLA (Monday through Friday, 7 a.m. to 5:30 p.m. PT).

Special coverages

Tesla’s policies include special coverages that not all car insurance policies provide. Special benefits include:

  • Wall charger coverage
  • Coverage for lost or damaged key fobs
  • Full glass coverage, including the Tesla panoramic roof
  • Rental car reimbursement

Other Tesla insurance options

Not everyone is eligible for the Tesla Insurance program, and even if you are, it’s still a good idea to shop around and get quotes from multiple insurance companies. As you can see in the below chart, insurance prices can vary a great deal between companies.

For example, Allstate’s quote for coverage for a Model S was $3,857, whereas USAA quoted $1,648 for the same coverage amounts — a difference of over $1,200 per year.

Annual premiums by company

Company Model 3 Model S Model X Model Y
Allstate $2,332 $3,857 $3,408 $4,407
Allied $1,702 $2,276 $2,841 $3,693
Geico $2,107 $2,747 $2,328 $2,436
Nationwide $1,453 $1,841 $2,692 $5,249
Progressive $1,524 $1,721 $1,587 $1,631
State Farm $1,403 $2,154 $1,961 $2,044
USAA $1,255 $1,648 $2,018 $2,099
Data collected by MoneyGeek and based on $100/$300/$100 liability insurance with comprehensive and collision coverage.

In general, we found that USAA, State Farm, and Progressive offered the most affordable insurance for Tesla owners.

When comparing options, consider how much car insurance you need. In most states, the minimum amount of car insurance required by law is liability coverage, which covers property damage and injury to other people if you cause an accident. However, this coverage doesn’t pay to repair or replace your own car.

If you want protection for your Tesla in case of an accident, you’ll need to purchase collision and comprehensive coverage, which are optional coverages in most states. You may be required to purchase these coverages if you took out a loan or lease to finance your Tesla.

FAQs

Are Teslas expensive to insure?

Tesla vehicles cost significantly more to insure than other cars. They are luxury vehicles with high-tech features, so finding body shops that can work on them can be challenging. Those factors can cause you to pay higher premiums than you would with another vehicle.

Does Tesla offer good insurance?

The Tesla Insurance program could be a useful option for some drivers. If you are eligible for coverage, you could save 20% to 30% on your insurance premiums. No one knows its cars better than Tesla, so the automaker is better able to handle any claims and repairs than other companies.

Tesla Insurance is only available in a few states, however, so most Tesla drivers won’t be able to get coverage.

How much does Tesla insurance cost?

The average premium for all Tesla models is $3,216 per year or $268 per month. Your actual cost depends on your location, the model of Tesla you own or lease, your driving habits, desired coverage, and selected deductible. Rates can vary a great deal among insurance companies, so request quotes from multiple insurers to find the best deal.

Bottom line

When it comes to owning a Tesla, the purchase price is only one part of the costs you should expect. Insuring your Tesla can be expensive, costing far more than it does to insure other vehicles.

If you are eligible, getting coverage through the Tesla Insurance program can lower your costs. Or you can shop around and compare car insurance quotes from the best car insurance companies to find the best car insurance rates in your area.

  • You could save up to $500 with some companies
  • Compare dozens of providers in under 5 minutes
  • Fast, free and easy way to shop for insurance
  • Quickly find the perfect rate for you

Author Details

Kat Tretina Kat Tretina is a freelance writer based in Orlando, Florida. Her work has been published by publications like The Huffington Post, Entrepreneur, MarketWatch, and more. She specializes in producing content around paying down debt, increasing income, and maximizing credit cards. You can view her work at www.KTretina.com, or contact her on Twitter @KatTretina.