Tesla Turns Car Accident Insurance Upside-Down

  • Tesla has created a customised car accident insurance package, InsureMyTesla, that is cheaper than traditional plans because it factors in the vehicles’ Autopilot safety features and maintenance costs.
  • InsureMyTesla has been available in 20 countries, but Tesla just recently partnered with Liberty Mutual to make the plan available in the US.
  • InsureMyTesla shows how the insurance industry is bound for disruption as cars get safer with self-driving tech.

Tesla struck a deal with Liberty Mutual to create a customised car accident insurance package — and the move shows how the electric automaker is intent on disrupting the insurance industry.

The new plan is called InsureMyTesla and was designed specifically for Tesla vehicles. Its benefits include replacing Teslas damaged beyond repair within one year. Tesla launched the package on October 13 in the US in all 50 states, but it already exists in 20 other countries, a company representative confirmed.

esla started quietly rolling out the InsureMyTesla program in February in Hong Kong and Australia. The electric car maker partners with different insurance companies across the globe to offer InsureMyTesla, which lowers overall insurance costs by factoring in the vehicles’ Autopilot safety features and maintenance costs.

Tesla CEO Elon Musk has said that insurance agencies should adjust their prices for Tesla vehicles because the cars come with Autopilot, the company’s advanced driver-assistance feature.

The National Highway Traffic Safety Administration found that crash rates for Tesla vehicles have plummeted 40% since Autopilot was first installed. Electric vehicles also generally require less maintenance then traditional, gas-powered vehicles.

“If we find that the insurance providers are not matching the insurance proportionate to the risk of the car then if we need to we will in-source it,” Tesla CEO Elon Musk said in February.

Tesla’s partnership with Liberty Mutual marks the first time the InsureMyTesla package has been available in the US. The US launch comes a few months after AAA said it would raise ratesfor Tesla owners after seeing a high frequency of claims among Model S and Model X owners.

AAA based its decision based on data provided by the Highway Loss Data Institute, an analysis that a Tesla spokesperson said was “severely flawed” at the time.

The deal with Liberty Mutual shows how US agencies are starting to realise that they must adjust their prices as cars get safer with advents in self-driving tech.

Insurers like Cincinnati Financial, Mercury General, and Travellers have noted in SEC filings that driverless cars could threaten their business models, according to a 2015 Bank of America and Merrill Lynch report.

The personal car accident insurance sector could shrink to 40% of its current size within 25 years as cars become safer with autonomous tech, according to a report by the global accounting firm KPMG.  The question is, which NZ insurer will be the first mover to innovate car accident insurance adapted to the promise of crash-free autonomous cars?

Tesla says it also hopes to one day bundle the price of insurance and maintenance into the price of future vehicles. “It takes into account not only the Autopilot safety features but also the maintenance cost of the car,” Jon McNeill, Tesla’s vice president of sales and services, has said of InsureMyTesla. “It’s our vision in the future we could offer a single price for the vehicle, maintenance, and car accident insurance.”

8 Responses

  1. Broker 1979
    | Reply

    We’re certainly heading into new space with this. If Tesla and ultimately other car manufacturers follow suit and underwrite their own product it will be a game changer for the broker sector and the wider insurance industry. It’s a very real concern. IF AND WHEN autonomous cars are truly impact avoiders there will be no need for MV insurance at all. Despite claims to the contrary underwriters do quite well from MV , and of course the specialist motor underwriters will be hit very hard. Interesting times. We’ll watch this space.

  2. Tui Kane
    | Reply

    Anything that reduced traffic accident rates is a positive and all options need to be looked at. We have started modernising our fleet to include better safety features and this has made a big improvement. I can’t see us including Teslas in the fleet any time soon but understand that autonomous driving technology is the next big step for vehicle safety so will be watching with interest. Hopefully central and local government will pave the way!

    Government must also take some responsibility for increasing the uptake of safer vehicles including financial incentives – it would be effective and also far outweigh the economic and social cost of vehicle injuries and fatalities. Come on Labour/Greens coalition, time to take the initiative on something meaningful!

  3. Hans
    | Reply

    Electric vehicles are slow to catch on in New Zealand even though they’re proved to be eco-friendly with superior technology and a much lower car accident rate (maybe that’s down to the more ‘aware’ driver!). The media article this morning isn’t encouraging either. The Herald states that younger kiwis and women are very pro-EVs but our blokes are dinasaurs that just don’t get it. They still want the engine roar, fuel smells and oil spills. All pretty dumb macho thinking. Time to get with the technology boys! The article is quite interesting reading so here you have it Crash http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12025728

  4. Adrian
    | Reply

    There’s more news from Tesla this month (aside from another unfortunate self-driving fatality recently) and they’ve really upped the anti now with a driverless truck. It’s due to go into production next year but they’ve already been using a prototype around the massive production facility in San Francisco. Tesla’s ramped that up another notch with some trial runs from San Francisco to the satellite factory in Nevada – seemed to have gone to plan or at least they’re not saying anything to the contrary. Tesla once talked about installing a high-speed autonomous underground train between the sites which seems a bit far fetched – Auckland can’t even organise a tube train to the airport! I hear Uber Trucks had autonomous trucks operating in the US for a while so maybe Tesla’s just playing catchup. EV’s and self-driving, it’s all good stuff and looks to be gaining some ground. They say the pleasure of driving and smell of petrol fumes will be dead i n another 20 years. So with no more car accidents it might be time to retire Crash Management?

    • Crash Management
      | Reply

      Thanks for adding to the discussion Adrian. We understand the Tesla truck is fully electric, but not sure that this one’s driverless. You’re probably right about the Uber driverless trucks testing in the US though, and we’re told the technology’s been trialed in Europe for a couple of years now. There haven’t been any crashes or other incidents yet that we’re aware of either – great for business generally, perhaps not so promising for the collision repair sector or for Crash Management for that matter! Having said that, NZ road’s aren’t world-class and certainly not equal to the autobahns (!) so perhaps the panelbeating trade in NZ has a few years left

  5. Mike
    | Reply

    Autonomous cars significantly reduce car accidents and claims so will have huge benefit to insurance companies and customers. Phil Goff can park his Auckland petrol tax, it would be much more productive to look at ways to fast track driverless cars and the infrastructure needed to support them.

  6. Crash Management
    | Reply

    Not everyone’s sold on the driverless car craze – as reported in NZ Herald today:


    Driverless cars could be hacked and deployed as “fully loaded weapons”, according to the chief executive of Canadian company Blackberry. Best known for its smartphones, the company is developing software for driverless cars in partnership with Baidu, the Chinese web search giant. John Chen, Blackberry’s chief executive, said driverless cars were programmed with more lines of code than a typical fighter jet, offering enormous scope for hackers to exploit vulnerabilities to insert malware.
    “A car could easily be infected with viruses [and] is literally a fully loaded weapon. If hackers can get hold of it, you can imagine what they could do.”

    He added that the industry was working hard to reduce the risks. “I can create a car I think is 90 per cent virus-free but as soon as that car gets on the road and is being used, those conditions need to be regularly checked,” Chen said. Unlike a jet, all of the code comes from different sources, which can exacerbate its vulnerabilities to cyber attacks. Despite huge investment from tech giants like Google, Apple or Tesla, Chen claimed driverless cars would take at least another five years to take off commercially.

    Chen has called for governments to set safety standards that tech giants can adhere to.
    “Regulation, and safety and security tech needs to be established well before I think anyone should allow the cars on the road,” he said. “The self-driving car still has a lot of human error and safety control.” He also pointed to the coexistence of driverless cars with manned vehicles on the road as a major challenge. “If there is a crash, who would the insurance hold liable — the human or the car?” he said. Chen’s comments come just weeks after Apple’s self-driving car crashed on a test-run near its headquarters in Silicon Valley while it was on “autonomous mode”. Self-driving cars designed by Waymo, a subsidiary of Google’s parent company Alphabet, have problems understanding the basic rules of the road.

  7. Mike
    | Reply

    The autonomous car insurance debate hasn’t really surfaced in NZ yet but has been hotting up in Australia recently particularly around third-party car insurance policies, which are compulsory there (and should be here too, but that’s another on-going story). Not all Australian stakeholders are in agreement though. Insurance companies generally see no need to change third party car insurance status quo and the Insurance Council is taking a watch n see approach to the driverless car phenomenon. Their main challenges are around personal injury which doesn’t apply in NZ due to ACC but it’s still worth keeping up with the debate because DRIVERLESS CARS ARE COMING TO A PLACE NEAR YOU – SOON. The industry needs to be ready for the at-fault liability arguement before, not after. More details on the Australian debate on third party car insurance here http://www.insurancenews.com.au/daily/insurers-back-light-touch-ctp-changes-for-driverless-cars

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