Tesla Auto Insurance Questions to Consider

Christian Richter Personal Insurance Leave a Comment

 


Elon Musk and Tesla have been in the news recently for a variety of reasons – we’ve most enjoyed the banter between Musk and the highly revered Charlie Munger and Warren Buffet.

Tesla continues to struggle with production issues and a backlog of vehicle orders now over half a million and counting. And while profitability and sustainability are deserving chief concerns for analysts and shareholders, we’re troubled with how Tesla’s product supply issues are impacting our Tesla-owning policyholders.

The first Model S was delivered in June of 2012, and since then, nearly 120,000 units have been delivered to owners within the United States. Today, Teslas only represent .04% of the vehicles on the road.

The insurance industry is massive and companies can be notoriously slow to change with the times. There are many reasons for this, but the one we’re primarily concerned with is their need for data. Many insurance companies were unsure how to adequately rate for Teslas because there was so little of it. What would repair costs look like on a vehicle trying to revolutionize the auto industry? How would they underwrite them and remain profitable? 

Carriers were left to speculate. Some, such as Mercury Insurance, did so and failed, and subsequently decided to leave the insurance market for Teslas. Most are still seeking answers and trying to figure it out. I don’t know of an insurance company that is confident in their approach to Tesla and expect it could be a while. If you own a Tesla, please expect volatility with your insurance costs in the coming years.

Getting repairs done on a Tesla is not a smooth process. And that is putting it lightly… In the event of an accident, there are two necessary components to getting a vehicle repaired: a mechanic and the replacement parts. If you own a Tesla, getting both in a timely manner will prove challenging.

Tesla Repair Shops:

The company has built out a modest network of “approved” repair shops, and in 2017 disclosed plans to open Tesla-owned repair facilities. Musk reiterated those plans earlier this month. Right now, those additional repair shops would be welcomed by many frustrated Tesla owners. The current options are inadequate for the volume of work that is needed for owners, and the company’s entry repair facilities cannot come soon enough.


Tesla Repair Parts:


Tesla has an order backlog that, at its current pace, would take more than 15 years to fill. So, it should come as no surprise that obtaining replacement parts for repairs is an incredibly slow process. If you insure your Tesla on a personal auto insurance policy, thirty days is most likely the maximum amount of rental car coverage available to you. At this time, some Tesla repairs are taking up to nine months. That sort of timeline presents a serious problem, as there could be up to eight months where you need a vehicle, but your insurance coverage has been exhausted.


Teslas are great cars, and we truly admire the pioneer that Elon Musk is. However, with any decision it’s important to have as much information as possible. If you’re considering purchasing a Tesla, or have purchased a Tesla, are you prepared to deal with a lengthy repair process that leaves you without a vehicle?

DISCLAIMER: This article is provided for general informational purposes only and should not be relied upon for legal advice. Old Harbor Insurance Services, LLC recommends you consult your risk manager, attorney, business adviser, or insurance representative for all questions or concerns.

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