Car insurance provides a safety blanket; if a vehicle is damaged or totaled, having insurance means that the full cost of repairs or replacements likely will not come out of pocket. However, the car insurance industry assumes that there is danger in driving and owning vehicles. With Tesla cars that have the autopilot and autosteer features, the risk is lower — and so is the cost of insurance.
Tesla has created insurance specifically for their vehicles: InsureMyTesla. The new Tesla insurance program was launched in Hong Kong and Australia in early 2017, and alongside Liberty Mutual Insurance, the company turns their attention to the United States. Compared to other car insurance packages, Tesla’s new plan is more affordable because it takes into account the various safety precautions, maintenance costs, and the lessened probability for human error which tend to lead to accidents. While the vehicles themselves are more expensive than others, Tesla CEO Elon Musk argues that the enhanced safety accompanying the self-driving technology, as well as the lowered insurance rates, are worth it.
Danielle Muoio of Business Insider writes, “The deal with Liberty Mutual shows how US agencies are starting to realize that they must adjust their prices as cars get safer with advents in self-driving tech.” Tesla is changing the car insurance industry by not only making their cars safer to drive but by setting a standard for lower insurance rates that take into account the lower risk of damage with better technology.
Car insurance companies profit by insuring vehicle owners for accidents they may cause; these accidents account for roughly 90% of accidents in the U.S. If self-driving cars are as safe as their creators claim they are, car insurance may be obsolete in the future.
It’s estimated that those who buy into InsureMyTesla may save up to 40% on insurance over the next 25 years. With nearly 268.8 million vehicles registered in the United States, adjusting the cost of insurance and making vehicles safer seems to be a positive shift for the American people. With the features offered by the newer Tesla models, it is believed that the risk of accidents will be almost eliminated. Tesla may be at the forefront of an insurance revolution.