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How much does Tesla car insurance cost ?

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Tesla's lined up at a charging station.A full coverage policy on a 2020 Model 3 Tesla costs $2,233 a year, for the average driver, which is a bit pricier than the average cost to insure other common types of vehicles.

Still, a Tesla may be one of the most cost-effective cars on the market right now. It runs fully on electric power, saving you hundreds to thousands of dollars on gas. It's also one of the safest cars -- a dozen airbags, camera sensors on the bumpers and safety tech all make Teslas, according to the company, "the safest cars in the world."

Based on the safety ratings and quality of these vehicles, you'd think Tesla car insurance would be cheap. But unfortunately, the Tesla insurance cost is above average. Fortunately, there are ways to save money on your car insurance.

Read on for a deep dive into the best insurance for Tesla Model 3 and other models, how to save on your car insurance and how Tesla insurance rates compare from one state to another and among car insurance companies

Are Tesla’s expensive to insure?

To insure a 2020 Tesla Model 3, the average driver would pay $2,233 a year. That’s nearly $315 more than the average car insurance rate nationwide ($1,920) for all vehicles.  It’s about the same price as standard car insurance, just $24 more, but higher than the cost to insure other car models, with the exception of convertibles. Below are average rates for other vehicle models:

  • Vans; $1,515
  • Trucks; $1,750
  • SUVS; $1,801
  • Tesla Model 3; $2,233
  • Cars; $2,209
  • Convertibles; $2,475

Some of the reasons the Tesla insurance cost is higher than average car insurance include:

The cost of the model

Car insurance premiums depend, in part, on the cost of the vehicle. Insurance on the Tesla Model 3, with a base price of $39,990, is less than insurance for the Tesla Model S, which comes with a base price of $85,000. The Tesla Model 3 insurance cost in California, for example, is as low as $2,796 in our findings, compared to $3,529 or higher for the Model S.

How much a car is worth is important to car insurance companies because if you carry comprehensive and collision coverage, which you should with any new car or one that still has a decent value even if a little older, your insurer may need to pay out the value of the vehicle if your car is found to be a total loss. If your car is worth $40,000 or even $85,000 you’re going to pay more for these protective coverages than someone with a car worth $25,000 because the insurer would have to pay out more if you totaled your car.

More expensive to repair

Not all shops can fix a Tesla, Fewer repair shops means the ones that do cater to Teslas can charge higher prices. The tech can be complex and only original Tesla parts are typically available. Additionally, specialized tools are needed for repairs. The Edmunds True Cost to Own report analyzes the cost of Tesla repairs over five years. According to the findings, a 2015 Model S costs over $8,000  inrepairs during the five-year period. Pricey repair costs contribute to higher insurance premiums because insurance companies have to pay out more for accident claims to repair your damaged Tesla, and that cost gets passed on to you by way of higher rates.

The bells and whistles of tech that are built into the Tesla may help with safety, but also pump up the price of car insurance, as those features cost a lot to repair if damaged in an auto accident.

Some areas are more sensitive to expensive damage

Someone tapping your standard car's bumper may be a small nuisance -- but it could be a big issue if it happens to your Tesla. There are camera sensors on the bumper that can be damaged if someone hits your bumper. And for the system to work seamlessly, calibration may be necessary, even if it's only a small fender bender. So bumping into a sign can turn into a nearly $7,000 repair bill.

Unibody construction

Tesla is moving towards unibody construction -- larger aluminum panels to achieve better stability and safety. This means a larger area of the vehicle may need to be replaced in case of damage, even if it's small. The extra labor and larger pieces to repair can again raise the price of insurance because the companies know the cost of repairs is high.

Location—and other rating factors

Car insurance companies use many rating factors, the car and the types of insurance you choose are a couple. Your age, driving experience, driving record and claims history are others. But the main factor used as the base quote from which to build off, and then adjust up or down depending on your driver profile, is where you live.

Some states have a higher Tesla insurance cost than others. That’s because the state and city you live in plays a role in what you pay for insurance. The cost and frequency of claims and natural disasters in your area, among other factors, are taken into account by insurance companies when setting your rate. As you'll see in the Tesla insurance rates by state below, rates can vary dramatically. Tesla Model 3 insurance is highest in Texas at $3,725 per year. Ohio, the state with the cheapest insurance for Tesla, is less than half the cost of Texas at $1,456 per year.

Do the higher insurance prices mean that Tesla car insurance is a deal-breaker? Probably not. The Model 3 is Tesla's most affordable model and is rated as one of the safest vehicles. Tesla Model 3 insurance can be as affordable as a standard vehicle.

Tesla Insurance program

Tesla began offering its own coverage in August 2019 to provide customers with more affordable insurance. Tesla Insurance is underwritten by State National Insurance. The Tesla Insurance program is currently only available to California drivers but there are plans on expanding to other states in the future. According to the company, insurance for Tesla Model S and Tesla Model 3 insurance cost could be 20% to 30% lower.

Besides the lower price, the Tesla Insurance program provides unique coverages specific to the state-of-the-art electric vehicle. You can add these additional offerings to your base coverage (for a cost). They include:

  • Autonomous vehicle owner coverage: It's most unique coverage, autonomous vehicle coverage is not available through other car insurers. Tesla Insurance will provide liability coverage for property damage or bodily injury if your car gets in an accident while operating in autonomous vehicle mode.
  • Wall charger coverage: You'll have up to $3,000 available for loss or damage of the power charger as long as the damage isn't from a manufacturer defect or negligence.
  • Electronic key replacement: Covers up to $500 per loss of your Tesla electronic keys. Coverage is limited to two claims per policy period.
  • Auto loan/lease gap insurance: The coverage will pay for the difference between the vehicle value versus what's owed in car payments if your Tesla is a total loss after an accident.
  • Cyber identity fraud coverage: A Tesla is one of the most technologically advanced vehicles. It's connected to a cyber network that may potentially expose you to some risk. This coverage pays up to $15,000 in digital identity fraud losses per occurrence and up to $30,000 per period if your information is compromised.

How much does Tesla insurance cost in every state?

Besides the Tesla Insurance program, you can get coverage from all traditional car insurance companies. Are you wondering how much is insurance on a Tesla? Take a look at the average costs to insure a Tesla based on varying 2020 models, driver age and state.

Yes, let’s do a map! Should we do all models and both ages? Or are we picking just age 40 and like three models?


Cheapest car insurance for Tesla models

Regardless of what model car you drive, comparing car insurance rates is one of the most effective ways to get the best deal. No two insurance companies will have an identical price for the same policy, but you won’t know which one is the cheapest unless you shop around. Here are average car insurance rates for Teslas by carrier, so you can see which are the cheapest for your model.

CompanyAverage annual rate

Tesla Insurance program drawbacks

There are three main Tesla Insurance program cons:

  • Tesla Insurance is only available in California at this time.
  • Tesla Insurance does not cover their models if used for ride-sharing. The company is working on a commercial vehicle policy for gig workers who drive for Lyft, Uber or other services.
  • Tesla Insurance rates are based on your driving habits, which are reported back as part of the "informed Autopilot" functionality. Your rates may vary based on factors such as the speed you drive, the distance between cars and even how loud you play music or how often you honk the horn.

5 ways to save on Tesla insurance cost

If you're looking to save on your Tesla insurance cost, there are a few things you can do to drop your premiums. Although Tesla car insurance may be higher based on the fact that it's considered an advanced luxury vehicle, it has a few positives that make it more affordable to insure. Consider the following ways on how to save on the Tesla insurance cost.

1. Compare Tesla insurance rates

Be sure to get quotes from at least three insurance companies. For example, you’ll see above that Tesla Model 3 insurance quotes can vary in price as much as 70%  to 111% from one company to another. Getting a quote online takes a few minutes and doesn't come with any commitment.

Some of the cheapest Tesla insurance companies include:

  • Progressive
  • Geico
  • State Farm

If you live in California, be sure to add the Tesla Insurance program to your shortlist of insurance carriers to compare. Tesla claims to save you as much as 30% on your Tesla auto insurance.

2. Bundle your insurance

If you also have rental or homeowners insurance coverage, consider bundling the two with the same insurance company. You may receive a discount as high as 20% when you have all your insurance with one company.

3. Take advantage of Tesla car insurance discounts

Car insurance companies offer a variety of discounts. You may qualify for extra savings based on your driving habits, student status, low mileage, where you park your vehicle and more. Some insurance companies also discount premiums for drivers who own eco-friendly vehicles such as hybrids and electric cars. Farmers and Travelers Insurance give you 10% off when you drive a green vehicle, while Geico provides 5% off its insurance rates.

4. Go electronic

There are a couple of simple steps you can take to get a small discount on your Tesla insurance cost. Signing up for paperless billing to view your bills online instead and opting for automatic payments deducted from your bank account is convenient and could earn you about 5% off on your insurance bill.

5. Raise your deductible

Raising the deductible you'd need to pay in case of a claim could save you money. A higher deductible makes your Tesla auto insurance cheaper. Make sure you don't overdo it in order to save on your payments. If you're involved in an accident, you'll need to pay your deductible out of pocket before your insurance company pays the rest.

Final thoughts on Tesla insurance

A red Tesla.

Tesla vehicles are not cheap to buy -- new or used.  While many cars rapidly depreciate the first year Teslas are known to keep their resale value. A report by iSeeCars found that the Tesla Model 3 depreciated only around 5.5% during the first year while most cars depreciated around 20%. Having a car worth a decent amount means you want the best protection on this asset.

“When deciding on coverages for your Tesla, I recommend you choose full coverage,” says Penny Gusner, senior consumer analyst for Insurance.com. “Full coverage includes state required coverages, such as injury and physical property liability, but also collision and comprehensive coverages. Comp and collision are what cover your vehicle, regardless of fault, if it’s in an accident or sustains storm damage or is stolen.”

If you finance or lease your Tesla, full coverage will be required, normally with higher liability limits (what pays out if you damage others) than state requirements. Higher limits are always smart to carry as it gives you more protection, ideally you want 100/300/100, rather than what states require to drive legally, which is generally around 25/50/25. That means it is less likely your claim will exceed your limits.

Shopping around with your own current insurance carrier for Tesla rates is advisable, but then also get at least three comparison quotes to see what company offers you the best Tesla car insurance rates. And if you live in California, be sure to check out the insurance Tesla offers, as it has special offerings the other insurance providers don’t provide, such as the autonomous vehicle owner coverage.

“Car insurance rates may be higher than you expect for this unique high-tech car, so shop for your insurance when you’re buying your car. Don’t wait until after you’ve already purchased the vehicle to check insurance rates, or you may find that the cost of the car and insurance is beyond your budget,” Gusner advises.