By on June 4, 2017

tesla model-s-rear, image: Tesla Motors

The American Automobile Association thinks Tesla cars should cost more to insure due to abnormally high claim frequencies and expenditures compared to similar vehicles. The group said premiums for Tesla’s Model X and Model S could increase by up to 30 percent, based primarily on data from the Highway Loss Data Institute. “Looking at a much broader set of countrywide data, we saw the same patterns observed in our own data, and that gave us the confidence to change rates,” said Anthony Ptasznik, chief actuary of AAA.

Obviously, Tesla Motors isn’t pleased and is offering a rebuttal before other insurers follow in AAA’s footsteps. 

“This analysis is severely flawed and is not reflective of reality,” the automaker said in a statement emailed to Automotive News. “Among other things, it compares Model S and X to cars that are not remotely peers, including even a Volvo station wagon.”

Tesla asserts that it is “false and misleading” to compare its products against vehicles like the XC70, specifying that the Model S held the lowest likelihood of injury, according to the National Highway Traffic Safety Administration. While that may be true, the Highway Loss report showed the Model S possessing a 46 percent higher claims rate than normal with repair bills over double the industry average.

The report places the car alongside other large luxury vehicles 90 to 110 cubic feet in length and between 3,500 and 4,500 pounds. Included in this group are models like the BMW 5 Series, Audi A6, and Mercedes-Benz E class — company Tesla says the Model S doesn’t belong with.

 

[Image: Tesla Motors]

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51 Comments on “Tesla Motors Annoyed After AAA Raised Insurance Rates on its Cars...”


  • avatar
    JohnTaurus

    How will they *ensure it didn’t happen elsewhere?

  • avatar
    Fred

    If your car has a high rate of repair and injuries it will cost more to insure, regardless of it’s classifications.

  • avatar
    tnk479

    Tesla responds to all criticism in one of the two following ways:

    * Say it isn’t true because accuser has wrong numbers and/or accuser is making up allegation due to hating Tesla or not being able to compete with Tesla
    * Say it doesn’t matter because they already fixed the problem or are about to fix the problem with a wireless software update, and anyway their fans love Tesla as evidenced by the satisfaction rate

    The high maintenance rates have been a problem with Tesla from the beginning and seems to go against the narrative by EV fans that EV’s will be lower in maintenance because they use a simpler design with fewer moving parts.

    FWIW, IMO, some humbleness would go a long way to how I feel about Tesla. I suggest that instead of constantly saying how everyone out there is dumber than them and just doesn’t get it, that Tesla instead simply acknowledge that being a brand new automaker and building an entirely new type of vehicle is damned hard and that they are totally dedicated to improving their products. I would respect that much more than their current and past approach to criticism (some of which is valid and some not).

    • 0 avatar
      mcs

      @tnk479: This isn’t about maintenance costs, it’s about body repair costs. EVs are in fact lower maintenance. I actually have one and put a lot of miles on it., There are fewer parts to break, so a basic EV is going to be lower in cost. For me, 48k miles and just wipers and washer fluid. It’s kind of a stretch to say that because Tesla aluminum bodywork is expensive to repair, therefore a Nissan Leaf must expensive to maintain.

      When you start adding trick stuff like falcon doors and motorized door handles like Tesla, those parts are going to probably add to the maintenance costs regardless of whether or not you have an ICE or an EV. Other EVs don’t have those features so don’t have the same maintenance issues.

      Finally, if you want to compare maintenance costs, compare the Tesla with other cars capable of 0 to 60 in the 2-second range. Compare Aventador and LaFerrari maintenance costs to a P100D. High performance is usually going to mean high maintenance costs (although I suspect the Corvette might be an exception).

      • 0 avatar
        tnk479

        Fair enough on maintenance, not insurance repair rates.

        I will push back on your 2-second comparison to super cars that are in a completely different league. Granted the Model S P100D Ludicrous mode is a neat trick. Beyond that one off trick (which it can perform very few times) it is very apples to oranges. The Tesla isn’t track worthy at all. It overheats and retards performance. By contrast, a LaFerrari needs to be warmed up and can perform in race track conditions, come in for a tank of fuel, and do it over and over. No way is a P100D even remotely comparable. The P100D is comparable to a Panamera Turbo in size and performance.

        • 0 avatar
          addm

          Fastest car on Nurbugring is an electric car. Unfortunately for you, the various parameters of lithium batteries are only improving.

          • 0 avatar
            MeaMaximaCulpa

            Well that’s HIGHLY debatable, it’s claimed to be the fastest production car. But is the car actually in series production and is the car homologised in Europe?

          • 0 avatar
            JimZ

            it did one lap, and is not a vehicle you can buy.

      • 0 avatar
        spw

        Tesla maintenance costs are not cheap, minimum service is $600 and it has nothing to do with high performance at all, basically it is Tesla’s way of making some money.

        It would be very different from Leaf and Prius PHV or Volt.

  • avatar
    eManual

    From OP: 90 to 110 cubic feet in length.

    Cubic feet is volume, not length. Somebody flunked math/physics …

  • avatar
    AJ

    With saying that there are abnormally high claim frequencies, is it that Tesla drivers on an average are more likely to cause a wreck, or is it that the cars have a higher rate of something breaking while being driving and causing a wreck?

    • 0 avatar
      srh

      I talked to an insurance agent about the high rates on my Nissan Leaf. The used Leaf, for which I paid $9000, costs more to insure than either my new BMW 4-series, or new Focus RS. Both of those cost at least 5X what the Leaf cost.

      His claim was that minor incidents on other cars can cause major damage on an EV. For example he says he had a customer high-center his Tesla, scraping the bottom. And that Tesla claimed the structural integrity was shot, and required a $20,000 repair (including replacing the battery pack).

      I don’t know if this is true or not, and it still doesn’t explain to me why my Leaf, which could be completely replaced for $10K, costs so much.

      • 0 avatar

        My guess is that it’s just because the LEAF is a low volume car relatively speaking. Not enough data to give the insurer comfort their predictions are accurate, so they pad the premiums to be on the safe side.

        Even so my premiums aren’t crazy expensive, the 2011 LEAF costs $15/month more than our 2007 Altima. Part of that $15 extra is because the car is 4 years younger and I have declared high mileage on the LEAF and local milage on the Altima.

        $15/Month isn’t going to break the bank.

      • 0 avatar
        derekson

        Weren’t the first few years of the Leaf built using a lot of aluminum before they lightened the battery and replaced a lot of it with steel to get costs down? I imagine this would impact repair costs a lot.

        • 0 avatar
          mcs

          @derekson: That’s true. I think it was the front fenders were aluminum. There might have been other parts as well.

          • 0 avatar

            2011/12/LEAF’s have several body panels that are aluminum.

            Hood, front fenders, doors. I would know I had all of these replaced with new parts after a deer strike at 4,000 miles.

            Thanks to the original crappy battery I now have a new battery. Lighter battery *and* lighter body panels.

            They just don’t build them like they used to :-)

          • 0 avatar
            mcs

            @JP: You just need to find a way to get your hands on a heat pump from a newer scrapped Leaf.

  • avatar
    thx_zetec

    I test drove a Tesla model s. Acceleration is amazing. Claim freq might be due to having so much acceleration on tap, it would be quite a temptation.

    • 0 avatar
      eManual

      In addition, after seeing the Tesla at a stop light/sign 250+ feet away, a conventional driver might think they have plenty of time to enter the street, not realizing that the Tesla driver can close that distance rapidly. Ends up being the conventional drivers fault, but insurance must pay.

      In addition, since the Tesla blends into other “jelly bean” cars, it doesn’t have other clues such as the loud exhausts on other high performance cars.

  • avatar
    SCE to AUX

    The Model S and X may indeed be safer cars, but they’re exceptionally expensive to repair. And if the incident frequency is higher, then that plus repair costs makes a case for higher rates.

    Just because a car is safe doesn’t mean you’ll enjoy lower rates.

  • avatar
    Hummer

    Who actually submits a repair claim to insurance, you still end up paying the same amount in increased insurance costs if not much, much more. This must be why insurance is so damn expensive.

    I’m assuming the abnormally high repair frequency being about random electronics and the such, like doors handles not moving out properly. (Not wrecks)

    • 0 avatar
      Hummer

      As far as cost with wrecks… bring back steel bumpers, you can replace steel bumpers all day for $200, not to mention being less likely to cause damage to other components… like A/C condenser, coolant rad, oil rad, trans rad, power steering rad. Looks 10x better than plastic too.

    • 0 avatar
      Scoutdude

      Insurers aren’t paying out on failing electronics, nor are the tracking that, however they are paying for that expensive door handle when the door gets smashed.

    • 0 avatar
      JimZ

      “Neddy doesn’t believe in insurance. He considers it a form of gambling.”

      • 0 avatar
        DevilsRotary86

        Neddy changed his mind recently on that one. In a recent episode:

        Ned: Am I hearing this right? Is the church council truly considering gambling?

        Lovejoy: You know, Ned, the Bible never explicitly condemns gambling. Biblical folks were always playing games of chance, like, uh, drawing lots.

        Ned: (gasps) Leviticus drew lots. Joshua drew lots, Nehemiah. Even the apostles were lot-drawers.

        Ned: If gambling’s okay, then I’m getting health insurance for the kids!

  • avatar

    The tesla is probably unique, or at least Ferrari-like in that there is probably no aftermarket for parts. No Junkyard parts, and no Chinese parts. Tesla may be reaping the Apple Store model they use for car repairs. Every repair is done with Tesla parts, in a Tesla shop. Wasn’t it Henry Ford who said “I’d give them the car if I could be assured of every part replacement afterwards” ? or something to that effect ?

  • avatar
    eggsalad

    This is math, and this is business and this is something called actuarial science. When a car is expensive to repair and the records show it has above-average incidence of crashes, it will cost more to insure.

    Period.
    Full stop.

  • avatar
    ejwu

    Is tesla actually asking to be insured at rates like Ferrari F12 and 812?

  • avatar
    RRocket

    Here’s what $30k damage on a Tesla looks like. http://gas2.org/2015/01/06/this-is-what-30000-of-damage-looks-like-on-a-tesla-model-s/

    Not surprising insurance rates are going up.

    • 0 avatar
      Ermel

      I’d have that repaired at a non-certified body shop instead. As they say, to a sheet of metal it doesn’t matter whether it’s being welded into a Dacia or into a Tesla. (Actually, the saying explains why restoring a cheap classic car needs not be much cheaper than restoring an expensive one, but it applies equally in this case.)

      More on topic, what are the insurance rates for a Panamera or Cayenne? That’s what I’d see as the logical combustion-engine counterparts to the Models S and X, respectively, not the standard business-class sedans like the E class, 5 seriea, or A6.

      • 0 avatar
        JimZ

        It’s not wise to assume just anyone knows how to work on aluminum. Aluminum is much more prone to cracking and tearing if overworked, and you need different techniques to weld it. Plus, depending on the specific alloy the heat-affected zone (HAZ) around the weld might suffer from altered properties.

      • 0 avatar
        ejwu

        First, not every body shop knows how to repair aluminum panels. Second, Tesla only provide parts to certified body shops, which are mostly premium ones. So no, you cannot do it cheaply.

        • 0 avatar
          spw

          Other manufacturers have decades, if not more of experience, on how to make their cars cheaper to repair… i am sure Tesla will get there eventually.

      • 0 avatar

        @ermel

        There is an element of risk having a non approved shop do repairs.

        Several enthusiasts who have salvaged Tesla’s from scrap yards and tried to return them to service after doing their own repairs or putting the chassis and drivetrain into a VW camper for instance unable to get the car to start. Tesla can disable cars remotely. There are only a few states that have right to repair laws that would protect you from this intentional bricking.

  • avatar

    I know that since 80s Ford takes into account minimizing repair costs when developing the new model. I am not sure if Tesla does the same. Most obvious example would be using so called sacrifice panel on trunk lid in my Fusion.

  • avatar
    Kyree S. Williams

    From what I understand from talking to some insurance adjusters and experts, a lot of what drives up the cost of a Tesla repair is that it takes longer. Tesla doesn’t have the same kinds of parts distribution networks that larger automakers have. So a repair part could take three months to get for the Tesla, as opposed to a week or two for another car. That’s additional money spent putting a Tesla customer in a rental car, additional time that the car sits in the shop (and incurs extra fees as a result), and the part itself may be more expensive, since there’s not really an aftermarket. Then, there’s the fact that Tesla exclusively works with a sparse network of approved body shops, limiting where you can go to get the car repaired (I presume out-of-network body shops are unable to order parts or something like that).

    Seriously. Look up all the horror stories about people waiting eight and nine months for repairs on their Teslas.

    It doesn’t seem like a lot of Tesla’s current customers buy its cars for dollars-and-cents reasons; they do so because they are passionate about the cars. I myself would order a Model S tomorrow if it were in my budget. So they’ll put up with it. However, the influx of Model 3 customers will probably be a little more cost-conscious, not to mention that there will be quite a few more Teslas out there, so Tesla needs to get this figured out. You can’t be a volume automaker and then have the same niche repair process as Pagani or McLaren.

    • 0 avatar

      oh, yes Kyree. I’m pretty sure you need to take a test or sign a pledge…”Will you promote Tesla at any and all occasions ?” They may even give you 100 shares as an incentive when you take delivery.

      Tesla is uncommonly common in my area, and we’ve been pinned by Tesla acolytes more than once in social settings.

    • 0 avatar
      JimZ

      “It doesn’t seem like a lot of Tesla’s current customers buy its cars for dollars-and-cents reasons; they do so because they are passionate about the cars.”

      No, they’re passionate about Tesla/Elon Musk. A great many of them don’t know the first thing about cars, but think they do because they follow Elon’s twitter feed.

  • avatar
    DeadWeight

    TTAC is LAME lately, with sparsely few articles, and few interesting ones.

    Get on the stick, Mark S, and make TTAC at least relatively interesting and thought-provoking again.*

    *Constructive criticism.

  • avatar
    spw

    Doesnt Ferrari have much higher insurance costs? It would be beneficial for Tesla to be in lesser insurance category. The fact that data shows more costs for insurers is statistics, and no wordplay can change that. If it was lumped in higher category from the start, then rates would be higher from the start and they would complain how their cars belong to dofferent category.

    Additionally, what about autopilot? It is supposed to lower crashes by 50% according to IIHS stats? So without it Teslas would crash 2x more? Or is the systems autobrake worse than its peers? Both are troubling.

  • avatar
    MrIcky

    Actuary pool flunky #1: We need to rate teslas, let’s google them and see what we can find out.
    ***
    Actuary pool flunky #2: Sounds good, I’ll google them…
    ***
    Google results: Tesla vs Hellcat, Tesla vs Hellcat, Tesla vs Aventador, Tesla vs Hellcat, Tesla vs Rando Ferarri, Tesla vs Hellcat…….
    ***
    Actuary pool flunky #2: Hey, ummm, you might want to look at this….
    ***

    I’m sort of laughing at Elon for whining about this too, seemed pretty predictable.

  • avatar
    stuki

    Sounds like Tesla can make a killing by starting an auto insurance company undercutting everyone else for Tesla insurance, if what he says is true…. It’s not like Tesla couldn’t use the money….

    • 0 avatar
      SPPPP

      Hey, there you go. Now you’re thinking like a Musk!

      Not only will Tesla’s own inhouse insurance be cheaper because they have greater faith in Tesla, but their computers will be powered by SolarCity panels. Win-win!

      In fact, Tesla can just give all its owners free insurance, just like they give them free access to Supercharger stations (unless they don’t, see Twitter for latest policy updates).

      No need to worry about pesky state regulations, those will get sorted out, just like lame dealer franchise “laws”.

      And if all else fails, Musk can escape the bill collector using SpaceX rockets!

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