Tesla Insurance Losses, Customer Complaints Continue Mount

Elon Musk had promised a revolutionary insurance product.

Sara Getman
Written bySara Getman
Sara Getman
Sara GetmanAssociate Editor

Sara Getman is an Associate Editor at Insurify and has been with the company since 2022. Prior to joining Insurify, Sara completed her undergraduate degree in English Literature at Simmons University in Boston. At Simmons, she was the Editor-in-Chief for Sidelines Magazine (a literary and art publication), and wrote creative non-fiction.

Outside of work, Sara is an avid reader, and loves rock climbing, yoga and crocheting.

Evelyn Pimplaskar
Evelyn PimplaskarEditor-in-Chief, Director of Content
  • 10+ years in insurance and personal finance content

  • 30+ years in media, PR, and content creation

Evelyn leads Insurify’s content team. She’s passionate about creating empowering content to help people transform their financial lives and make sound insurance-buying decisions.

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John Leach
Reviewed byJohn Leach
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John LeachSenior Insurance Copy Editor
  • Licensed property and casualty insurance agent

  • 8+ years editing experience

John leads Insurify’s copy desk, helping ensure the accuracy and readability of Insurify’s content. He’s a licensed agent specializing in home and car insurance topics.

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Published November 20, 2024 at 11:00 AM PST | Reading time: 2 minutes

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Tesla Insurance lost more money in the second quarter of 2024 than in the first quarter. Its loss ratio — the metric insurance companies use to measure profitability — increased from 99.8% in the first three months of the year to 107.4% in the second quarter, P&C Specialist reported.

The losses are due, in part, to the high cost of repairing electric vehicles. The average cost to repair an EV after an accident is $6,066, while the average for gas-powered vehicles is $4,703.

Customer dissatisfaction may also be a factor.

A Reuters report from last November cited common Tesla Insurance customer complaints, like long claim and repair times and the inability to contact adjusters. Some Tesla drivers reported making loan payments on totaled vehicles. The company currently has a Better Business Bureau rating of “F” for failing to respond to complaints.

Tesla Insurance struggles to live up to its vision

Insuring a Tesla Model Y, the company’s most popular, costs on average $319 per month for full coverage, according to Insurify data based on premiums from other mainstream insurers.

Tesla owners experience high premiums for a few reasons, including higher labor and part prices, limited part availability, and a shortage of Tesla automotive technicians.

Tesla Insurance’s goal was to revolutionize the industry with affordable coverage, estimating 20%–30% cheaper premiums for Tesla drivers. The company was also going to focus on quick service, including “same-day” collision repairs, according to P&C Specialist.

Instead, Reuters found that some customers waited for months to hear from adjusters, get repairs, and receive payouts.

Customers also struggle with the insurance company’s variable premiums. Tesla Insurance uses a vehicle-embedded telematics-style format to track driving behavior and set rates accordingly. The Tesla “Safety Score” tracks collision warnings, braking, turning, tailgating, speed, time of day, seat belt use, and more.

The Safety Score subsequently affects premiums, which can fluctuate from month to month, according to Tesla.

But a proposed class action lawsuit filed in September 2023 alleges Tesla Insurance is charging inflated premiums based on false collision warnings. So far the case is moving forward despite Tesla’s attempts to get it dismissed.

What’s next for Tesla Insurance and drivers

Despite the company’s poor loss ratios and reviews, it reported extreme growth — $497 million in written premiums earlier this year.

But Matteo Carbone, founder and director of the IoT Insurance Observatory, told P&C Specialist that the company’s rapid premium growth doesn’t indicate success.

“To grow, when you sell the same product at a half of the price (or less) than what is charged by the market, isn’t too difficult,” he said. “But then Tesla is underpricing the risks in order to reduce the cost of ownership of the vehicle.”

While Tesla Insurance doesn’t publicly list rates, users on Tesla forums report rapid and inconsistent rate increases. One Redditor claimed their rate increased by 45% after six months despite having no claims or incidents.

Sara Getman
Sara GetmanAssociate Editor

Sara Getman is an Associate Editor at Insurify and has been with the company since 2022. Prior to joining Insurify, Sara completed her undergraduate degree in English Literature at Simmons University in Boston. At Simmons, she was the Editor-in-Chief for Sidelines Magazine (a literary and art publication), and wrote creative non-fiction.

Outside of work, Sara is an avid reader, and loves rock climbing, yoga and crocheting.

Evelyn Pimplaskar
Edited byEvelyn PimplaskarEditor-in-Chief, Director of Content
Evelyn Pimplaskar
Evelyn PimplaskarEditor-in-Chief, Director of Content
  • 10+ years in insurance and personal finance content

  • 30+ years in media, PR, and content creation

Evelyn leads Insurify’s content team. She’s passionate about creating empowering content to help people transform their financial lives and make sound insurance-buying decisions.

Featured in

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John Leach
Reviewed byJohn LeachSenior Insurance Copy Editor
Photo of an Insurify author
John LeachSenior Insurance Copy Editor
  • Licensed property and casualty insurance agent

  • 8+ years editing experience

John leads Insurify’s copy desk, helping ensure the accuracy and readability of Insurify’s content. He’s a licensed agent specializing in home and car insurance topics.

Featured in

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