A Tesla may be one of the most cost-effective cars on the market right now. It runs fully on electric power, saving you hundreds to thousands of dollars on gas. It's also one of the safest vehicles. A dozen airbags, eight cameras and a rigid structure are part of the reason all models consistently earn a perfect safety score of five stars from the National Highway Traffic Safety Administration.
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One would think Tesla car insurance would be cheap based on its safety rating. However, the cost of Tesla insurance is above average. According to Insurance.com’s 2021 study, full coverage on a 2021 Model 3 Tesla costs $2,257 a year for the average driver.
There are ways to save on Tesla car insurance with some know-how. Read on for a deep dive into the best insurance for Tesla Model 3 and other models, find out how Tesla insurance premiums compare from one state to another and the best rates among car insurance companies.
Are Tesla’s expensive to insure?
To insure a 2021 Tesla Model 3, the average driver would pay $2,257 a year. That’s nearly $420 more than the average car insurance rate nationwide ($1,839) for all vehicles and slightly above the average premium for a standard car, according to an Insurance.com 2021 study. The only vehicle type that would be more expensive to insure would be a convertible. Below are Insurance.com’s average rates (published last year) for other vehicle models: Vans; $1,443Trucks; $1,684
SUVS; $1,729
Cars; $2,193
Tesla Model 3; $2,257
Convertibles; $2,442
Some of the reasons the Tesla insurance cost is higher than average car insurance include:
The cost of the model
Car insurance premiums depend, in part, on the cost of the vehicle. Based on a 2021 Insurance.com report, the Tesla Model 3 average insurance cost for vehicles with a base price of $46,990 is less than insurance for the Tesla Model S with a base price of $99,990.The Tesla Model 3 insurance cost in California is as low as $2,747 in our findings, compared to $3,872 or higher for the Model S.How much a car is worth is important to car insurance companies because if you carry comprehensive and collision coverage, which you should with any new car or one that still has a decent value even if a little older, your insurer may need to pay out the value of the vehicle if your car is found to be a total loss. If your car is worth $40,000 -- or even $85,000 -- you’re going to pay more for these protective coverages than someone with a car worth $25,000 because the insurer would have to pay out more if you totaled your car.
More expensive to repair
Not all shops can fix a Tesla, Fewer repair shops means the ones that do cater to Teslas can charge higher prices. The tech can be complex and only original Tesla parts are typically available. Additionally, specialized tools are needed for repairs.The Edmunds True Cost to Own report analyzes the cost of Tesla repairs over five years. According to the findings, a 2019 Model S cost an owner more than $5,000 in repairs during the five-year period. Pricey repair costs contribute to higher insurance premiums because insurance companies have to pay out more for accident claims to repair your damaged Tesla, and that cost gets passed on to you by way of higher average Tesla car insurance rates.
The bells and whistles of tech that are built into the Tesla may help with safety, but also pump up the price of car insurance, as those features cost a lot to repair if damaged in an auto accident.
Some areas are more sensitive to expensive damage
Someone tapping your standard car's bumper may be a small nuisance -- but it could be a big issue if it happens to your Tesla. There are camera sensors on the bumper that can be damaged if someone hits your bumper. And for the system to work seamlessly, calibration may be necessary, even if it's only a small fender bender.
Unibody construction
Tesla is moving towards unibody construction -- larger aluminum panels to achieve better stability and safety. This means a larger area of the vehicle may need to be replaced in case of damage, even if it's small. The extra labor and larger pieces to repair can again raise the price of insurance because the companies know the cost of repairs is high.Location—and other rating factors
Car insurance companies use many rating factors, the car and the types of insurance you choose are a couple. Your age, driving experience, driving record and claims history are others. But the main factor used as the base quote from which to build off, and then adjust up or down depending on your driver profile, is where you live.Some states have a higher average Tesla insurance cost than others. That’s because the state and city you live in plays a role in what you pay for insurance. The cost and frequency of claims and natural disasters in your area, among other factors, are taken into account by insurance companies when setting your rate. As you'll see in the average Tesla insurance rates by state below, rates can vary dramatically. Insurance.com’s study found that Tesla Model 3 insurance cost is highest in Missouri at $3,546 per year. Idaho, the state with the cheapest insurance for the Tesla 3, is less than half the cost of Missouri Tesla insurance, at $1,505 per year.
Tesla leasing insurance requirements
When leasing or financing a Tesla, you’ll pay more for insurance because you’ll be required to bump up your coverage. Tesla leasing insurance requirements from financing companies and lenders will require you to purchase more than basic liability coverage. You’ll need a full car insurance package including collision and comprehensive coverage to pay for any damages or losses to the vehicle.Tesla Insurance program
Tesla began offering its own coverage in August 2019 to provide customers with more affordable insurance. The EV manufacturer is on to something. According to Mike Brown of Breeze Insurance, “our recent study found that 66% of vehicle owners would be interested in buying auto insurance from an automobile manufacturer instead of from a traditional carrier.”The Tesla Insurance program is underwritten by State National Insurance and currently only available to drivers in Arizona, California, Illinois, Ohio and Texas. However, there are plans on expanding to other states in the future.
Real-time driving behavior plays a big part in the cost of Tesla insurance premiums. According to the company, insurance for Tesla Model S and Tesla Model 3 could be 20% to 40% lower for the average driver — and as much as 60% less for safe drivers.
Besides the lower price, the Tesla Insurance program provides unique coverages specific to the state-of-the-art electric vehicle. You can add these additional offerings to your base coverage (for a cost).
