Last Updated: August 18, 2022

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TLTR: At the forefront of green energy, Tesla is one of the fastest-growing and most recognized brands in the world. For first-time EV owners, getting Tesla car insurance could be challenging, so this article will help you understand why traditional coverage isn’t enough.

Tesla is on its way to global automobile domination, with worldwide revenue of $31.5 billion in 2020, as per Statista. What sets Tesla apart from the rest of the auto industry is its futuristic perspective on safety as the world’s best-selling electric vehicle (EV). 

Teslas can self-navigate, self-park, help you avoid collisions, and come with a built-in child lock. What’s more, their software will auto-update overnight, so you’ll always be driving the latest and the safest model on the road. 

In fact, the National Highway Traffic Safety Administration (NHTSA) has awarded the Tesla Model 3 a five-star rating in every category. 

While Tesla is a revolutionary car, it comes with some challenges, one of those being insurance. Many people are unaware that they need Tesla-specific insurance, not just typical car insurance.

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Tesla Insurance VS Traditional Car Insurance

Your personal auto policy offers you a vast range of protection, like primary liability coverage, collisions coverage, uninsured/underinsured motorist coverage, medical payments coverage, and comprehensive coverage. Both Teslas and traditional cars need the protection that the usual car insurance provides, but Teslas need more.  

Traditional car insurance is designed with one goal in mind—to keep the car and its driver financially secure after getting in an accident on the road. Unfortunately, it doesn’t take into account Tesla’s software, which is vulnerable to cyber hacks.  

Tesla insurance bundles all of the coverage mentioned above with a vehicle automation package specifically designed for tackling an EV’s vulnerabilities.  

What insurance does Tesla require?

Let’s look at all the coverage options that ideal car insurance for Teslas should have: 

Liability Coverage

Auto liability insurance is legally mandated in most states. It protects the insured against the property damage and bodily injury they’re legally liable to pay for due to any road accident that they’re involved in.  

For example, your Tesla is in an accident with another car on the road. The driver dislocates their knee and needs medical attention. Your liability insurance will pay for their medical bills and loss of income.  

Collisions Coverage

This will help you pay for repairs or reimbursement should you collide with another vehicle or an object. Imagine you’re driving your Tesla on a slippery road, you lose control and your car slides off the road, crashing into a tree. Collision coverage will kick in once you pay your deductibles and pay for the repairs that your EV needs.  

Uninsured/Underinsured Motorist Coverage

Imagine your uninsured teenage kid takes your Tesla for a ride and gets in an accident. If you have uninsured/underinsured motorist coverage, your car repair and medical bills will be compensated by insurance. (Consider also purchasing car insurance for new drivers to keep your uninsured/underinsured driver safe on the road.) 

Similarly, imagine you’re driving on your way to work, and another driver loses control of his vehicle and hits you. You find out that their coverage limit won’t help pay for all of your damage. Your underinsured motorist coverage would kick in and enable you to pay for repairs.  

Medical Payments Coverage

Medical coverage is optional, but we recommend you add it as an endorsement. While your auto liability coverage does pay for medical bills for the third party, it won’t pay your own medical bills.  

For instance, you crash your car into a tree and suffer a fractured skull. You can’t rely on auto liabilities coverage, but medical payments coverage will help you pay for your medical bills. Medical payments coverage is one of the must-haves in an auto insurance policy. 

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Comprehensive Coverage

So far, we’ve talked about collisions and liabilities. But what about accidents that don’t involve crashes? Comprehensive insurance protects damages and losses due to fire, rain, hail, vandalism, or theft. If you can’t afford to pay for repairs or live in a city with a high crime rate, you’re going to want this coverage.  

There’s also rental protection to consider. The Drive reports the story of a driver accidentally damaging his Tesla rental car and being handed a repair estimate of $17,000. Don’t let this be your story. Get comprehensive auto insurance. 

Autonomous Vehicle Liability

The best-known feature of a Tesla is that it can run entirely on autopilot. But it’s not a foolproof feature. CNBC reports that two men in Texas lost their lives when they crashed into a tree while their Tesla was on autopilot. Autonomous vehicle coverage will protect you against any property damage or bodily injury that occurs while your EV is on autopilot.  

Cyber Identity Fraud Liability

Cyber liability insurance isn’t a typical insurance coverage that one buys with car insurance. But the Tesla isn’t a typical car. The Los Angeles Times reports that Tesla Chief Executive Elon Musk described the Tesla Model S as a very sophisticated computer on wheels.  

The risk with having mobile computers is that a hacker could potentially steal the driver’s identity and sensitive data, or even hack the car’s software and cause it to malfunction. To keep Tesla owners safe against such risks, cyber identity fraud insurance is necessary. 

Wall Charger Coverage

Teslas, of course, don’t run on gas—they need to be charged. Wall charger insurance coverage has your back in case your wall charger gets damaged or lost. 

Electronic Key Replacement

This covers the damage or loss of your electronic keys. If your car keys get stolen, you will be covered for their replacement. Traditional car insurance policies do not cover electronic key replacement. 

Is a Tesla more expensive to insure than other cars?

Usually, yes. But it’s money worth investing. According to Bankrate, the average annual insurance cost for traditional cars is $1,674.  Whereas the average annual insurance cost for a Tesla is anywhere between $1,000 and $4,000.  

While your usual car insurance will cover the usual risks your vehicle may face while on the road, it won’t cover all the risks that a Tesla is exposed to. That means your Tesla and your wallet are in for some serious damage should something bad happen without the proper insurance.  

Saving an extra $1,000 for the year could have you paying thousands of dollars more in case of an accident later on. With Tesla car insurance however, you’re well covered. So, yes, Tesla insurance is more expensive, but it’s worth it. 

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Contact a local agent online to help you with your insurance needs.

Insurance Rates for Tesla Cars

Electric car insurance rates can be more expensive, but there are cheap insurance options available. Tesla itself offers the cheapest car insurance for their own cars, but they haven’t rolled the package out for all 50 states.  

Tesla is currently selling their own insurance through State National Insurance only in California. But Forbes reports that the company intends to offer coverage options in Illinois, Texas, and Washington in the near future. 

Many car insurance companies have taken the opportunity to offer Tesla insurance for drivers looking for smart coverage. Let’s look at the average cost and car insurance rates of Teslas from different insurance carriers according to the models available in 2021. 

Tesla Insurance for Model S

Multiple car insurance companies offer competitive rates for covering Tesla Model S. The accurate numbers depend on many factors, but let’s peek at the annual average cost you may be paying for a 2019 Tesla Model S, according to different insurance carriers as compiled by The Zebra: 

  • Infinity -$1,660  
  • Cincinnati Insurance – $1,879  
  • Erie – $1,912  
  • American Family – $2,062  
  • Nationwide – $2,151  

Tesla Insurance for Model 3

Nerd Wallet points out that the model 3 car insurance cost is almost 40% higher than the national average car insurance cost. Let’s look at how Nerd Wallet ranks the insurance companies offering Tesla insurance rates for Model 3: 

  • Progressive – $1,815  
  • State Farm – $1,943  
  • Geico – $2,565  
  • Allstate – $3,331  
  • USAA – $1,145  

Tesla Insurance for Model X

For a big electric car like Model X, insurance providers can charge you up to $3,000 annually. However, you can qualify for many discounts. Here are the car insurers quotes for Tesla Model X: 

  • Progressive – $2,347 
  • USAA – $2,446 
  • Tennessee Farmers – $2,719 
  • Country – $2,960 
  • Plymouth Rock Insurance – $3,030 

Tesla Insurance for Model Y

Value Penguin states that model Y incurs the cheapest insurance out of all four models. According to Money Geek, here’s the top five list of insurance companies offering quotes for Tesla Model Y: 

  • Progressive – $1,631 
  • State Farm – $2,044 
  • USAA – $2,099 
  • GEICO – $2,436 
  • Allied – $3,693 

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How do I Save on Car Insurance Tesla Costs?

Tesla insurance costs depend on many factors, such as the make and model of your car, your living situation, your credit history, the number of at-fault accidents you’ve been in, and more. However, here are some ways to cut insurance costs for Tesla owners: 

Bundle Your Policies

If you have additional insurance with the same insurance company, you can save on Tesla insurance. Likewise, if you have homeowners insurance, you can opt for bundled insurance. 

Raise Your Deductible

The higher your deductible, the cheaper your insurance.  A deductible is the amount of money you agree to pay in the event of a loss before the insurance providers pay you the claim amount. 

Go Paperless

Many car insurance companies will offer you discounts if you request online quotes and purchase insurance online as well. Cutting out the paperwork through digital transactions with, for example, an automatic payment setup, can save you up to 5% on your insurance cost. 

Good Credit Score & Driving Habits

Be a careful, responsible driver. Bad drivers pay more on insurance premiums! Having a few accidents under your belt can increase your rates up to $1,000 a year. Similarly, you can save on insurance costs with a good credit score. In addition, check out your state policy to get the best out of your policy pricing. 

Is Tesla Insurance Worth It?

Tesla is not a cheap car, and it comes with excellent built-in security features like a dash-cam and anti-theft alarm. Autonomous vehicle mode allows you to safely reach your destination without having to pay full attention to the road. Insurance might almost seem redundant for this amazing vehicle.  

However, cybersecurity hacks and system failures can leave you exposed to bigger and more significant losses. Tesla insurance can help you bridge the gap between a safe drive and a safe life. Agency Height’s insurance directory will help you find an agent and get the tesla insurance you’re looking for. 

Did you find this article helpful? Let us know what you’d like to read next in the comments section below!

Frequently Asked Questions (FAQs)

Does My Tesla Insurance Cover Ridesharing?

Tesla insurance is very much a personal insurance policy, which means that it doesn’t cover the commercial use of your EV. Ridesharing is a commercial activity, so you will need separate rideshare insurance for it. Tesla has also announced that they’re rolling out commercial coverage for ridesharing purposes. 

Why Should I Get Tesla Car Insurance from Other Insurance Companies When Tesla Offers In-House Coverage?

Tesla does indeed offer cheaper and more inclusive insurance policies to Tesla owners. On top of the usual coverage options, the autonomous vehicle protection package is also included in the policy. However, the company has made the insurance package available only in California for now. They’re planning on rolling out the coverage for the rest of the states in the future. But until then, other insurance companies are offering good alternatives. 

Connect With The Best Insurance Agents Near You

Contact a local agent online to help you with your insurance needs.

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