Tesla's insurer will offer lower premiums thanks to Autopilot

Thanks to Tesla’s insurer, the American company will be able to lower insurance premiums based on how much the user uses Autopilot

Elon Musk, CEO of Tesla, is known for his constant search for innovation. Recently, it was revealed that Teslas will self-diagnose and book a workshop appointment on their own. Taking things one step further, the American tycoon wants to enter the insurance field to achieve something the brand has largely neglected throughout its history: cheaper insurance premiums for its customers.

Tesla has announced that this month it will begin offering insurance for its cars that make use of the internal data from its Autopilot system to reduce insurance rates. Musk claims that the increased safety offered by his cars should be reflected in the price of insurance, a claim that could not be further from the truth.

Musk claims that Tesla will be able to offer lower rates because Autopilot can reduce collisions and, therefore, the risk of insurers losing money. The manufacturer will track how often its users use autopilot, with insurance prices falling depending on how long the driver uses this system (the more time, the cheaper).

Tesla regards its Autopilot as a life insurance policy

With this, it seems that Tesla blindly trusts its autonomous driving system, giving the incentive that the insurance offered by the brand itself will be cheaper thanks to Autopilot.

Tesla has been partnered since 2017 with the insurer “Liberty Mutual”, which offers the “InsureMyTesla” programme, exclusive to customers who have bought a Tesla. However, it seems this company will not be the one managing these novel policies; rather, it will be “State National Insurance Co”.

Although it is still unknown exactly what advantages this type of policy will have, the company in charge of these new insurance products has given some hints. One of them is that these new policies will allow a direct and constant flow of information between the customer and the insurer that will avoid the waiting times and inefficiencies that we users usually face when handling any procedure with our insurance.

However, the simple fact that the driver activates Autopilot does not mean their policy will drop in price. The company will also analyse how this system is used, so if it is used irresponsibly, as in the case of that driver who was drunk with Autopilot engaged, Tesla could increase the customer’s insurance premium.

Insurance rates usually depend on factors such as the customer’s age, address or history of incidents. However, generally insuring a Tesla has always turned out to be considerably more expensive due to the large number of technologies the brand’s cars have and, therefore, the high cost of their repairs. Proof of this is that the Tesla Model S ranks fifteenth on the list of the most expensive vehicles to insure in the USA, with an average annual premium of 2,940 euros.

Tesla’s insurance is generating scepticism among its competitors

However, not everything will be plain sailing for Tesla. Warren Buffett, CEO of Berkshire Hathaway, the company that owns the insurer Geico and, therefore, a direct competitor of Tesla’s new insurer, has shown himself to be genuinely sceptical.

The exact words of the world’s third richest man were: “The success of car companies in the insurance business is as likely as the success of insurance companies in the car business.”

Another problem Tesla faces is that its cars have already earned a reputation for being impossible to repair. Maryann Keller, an insurance analyst, stated: “There is a reason why Tesla has the highest insurance rates, and that is that they are impossible to fix. When you see them you’ll say, it’s not that bad, it’s just a small dent. However, that scratch can cost the insurer 15,000 euros. Furthermore, nobody guarantees the car will be left as it left the factory, so insurers risk getting their fingers burnt and, for that reason, premiums rise considerably.”

Therefore, we will see how Tesla’s new business plan works out. For now, it seems beneficial for the brand’s customers and, considering that Elon Musk knows very well where and how to put his money, we do not rule out that this new service may be a success.