By on August 27, 2018

Tesla Model 3, Image: Tesla
The Model 3 was intended to be Tesla’s affordable alternative for the mass market and, for the most part, that’s what it has been. Granted, the automaker did opt to prioritize the production of higher trim levels as a way to maximize profitability. But, given its financial situation, it was an understandable strategy. The Model 3 is still the cheapest way to get into a Tesla. However, it’s not the cheapest vehicle to own — especially when it comes to insurance rates.

Last year, AAA said premiums on Tesla vehicles would likely go up 30 percent after reviewing data from the Highway Loss Data Institute. At the time, Tesla said the analysis was “severely flawed and is not reflective of reality.” But the auto club stated the HLDI’s findings matched its own research, as well as numerous other sources.

“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.

The contributing factors to the brand’s above-average insurance rate are twofold. For whatever reason, Tesla models are subject to an abnormally high number of incidents that result in insurance claims, but they’re also more expensive to fix. “Teslas get into a lot of crashes and are costly to repair afterward,” explained Russ Rader, spokesman for the Insurance Institute for Highway Safety, which operates as the HLDI’s parent organization. “Consumers will pay for that when they go to insure one.”

For the Model 3, the result is tragically high premiums. A recent study conducted by Gabi Personal Insurance Agency Inc. and posted by Automotive News shows the EV’s average insurance cost across 150 ZIP codes is $2,814 per year. That’s $35 less than the cost of insuring a Porsche 911, using the same metrics.

“In the last month we had more and more people coming in with Model 3, and they were all complaining about high insurance costs,” said Gabi CEO Hanno Fichtner. “We found cheaper deals for them, but not as cheap as we thought they would be. We even had customers tell us they are returning their Model 3 due to the high running costs.”

Those cheaper deals bottomed out at $1,958 annually, according to the study. But Gabi also found Model 3s with insurance payments as high as $3,644 per year. For the sake of comparison, the average cost to insure the Chevrolet Volt Premier was $2,102 annually while the Honda Civic LX was at $2,068. While insurance rates for EVs and hybrid vehicles are typically a little higher than their internal combustion rivals, the Model 3 seems quite a bit higher than average.

Our own cursory examination of Chevy Bolt insurance averages also yielded lower premiums, based on several responsible owners living in various states and Canadian territories. Direct comparisons using various insurance outlets also showed the Model 3 costing significantly more to insure than the Bolt, but not at a consistently predicable rate.

According to Fichtner, the high cost of replacement parts and Tesla-specific body shops are major contributors to the high costs. This is also why other Tesla vehicles cost so much to ensure. For example, Gabi’s analysis of the base Model X 75D showed insurance rates averaging $3,410 per year, which is only about $100 less than an Audi R8.

Tesla has commented on the insurance issue in the past, saying it would take steps to remedy the situation. But there’s not much it can do until it lowers the costs associated with repairs or convinces its customers to drive safer and make fewer claims. In the interim, do you homework if you’re considering an electric vehicle as your next car. They are not created equal in the all-knowing eyes of the insurance gods.

[Image: Tesla Motors]

Get the latest TTAC e-Newsletter!

Recommended

44 Comments on “Tesla’s ‘Affordable’ Model 3 Costs a Bundle to Insure, Study Claims...”


  • avatar
    salmonmigration

    As much as I applaud Tesla for ditching the dealer sales network model, their service model is crap.

    I don’t want to pay applecare to rotate my tires.

  • avatar
    slavuta

    Tesla = pod. Give us cars

  • avatar
    indi500fan

    Should be no problem for a biz titan like Musk to set up his own deal and “disrupt” the existing insurance model, right?

    • 0 avatar
      JimZ

      deal in place for ins startup. funding secured

    • 0 avatar
      kurkosdr

      If Musk does that, he won’t be able to offload the generally high repair costs of Tesla vehicles onto someone else, like he does now.

      I do not know if the high repair costs for Teslas are that way because Teslas are genuine hard to repair or because Tesla the company is the Apple of car manufacturers, but stories of Teslas getting totalled by insurance companies over minor quarter panel damage means those premiums will likely go up.

  • avatar
    dividebytube

    Just yesterday I do believe I saw my first Model 3 – and it is not as nice looking as the S. Not that I’m crazy about the S but at least it is handsome.

  • avatar
    stingray65

    Tesla fanbois always brag about how much they save by using untaxed electricity versus taxed gasoline, but several hundred dollars worth of higher insurance buys a lot of miles of gasoline (which you can refill in 5 minutes instead of hours).

    • 0 avatar
      TimK

      Stop it, you’re making Gaia cry.

      RE the insurance rates — what do people expect for a low-volume, high performance sedan, from a company that has essentially no network of distributors for replacement parts? It’s amazing that the insurance is only 2X to 3X as expensive.

      • 0 avatar
        Hummer

        “what do people expect for a low-volume, high performance sedan, from a company that has essentially no network of distributors for replacement parts”

        My SS sedan is $400 every 6 months, it almost perfectly fits your description.

    • 0 avatar
      mcs

      @stingray65: So, what you’re saying is that if I buy 911 GTS my insurance rates will be lower than on a Model S or Taycan? Really. Even the article says the 911 is more expensive and that’s my alternative.

      Also, we’re not trying to save money on gas. I mean, seriously, I’m looking at $120k to a $140k cars. Do you seriously think that anyone buying cars in that price range is concerned about saving money? Get real. Most of us buying EVs like the smoothness, quiet, and instant torque. We like the performance. I’ve rarely met a fellow EV driver that is concerned about saving money or the environment. We like the way these m’f’ing cars drive. With my next new cars, I’m going to get enough range so that it will be extremely rare that I ever have to deal with public charging. That means just home charging and never having to go to a gas station.

  • avatar
    rpn453

    It’s not bad here in Saskatchewan yet. $1576 for a new driver. $1274 for me. The Bolt has identical pricing. A new Camry is $1476/$1174. Accord is $1439/$1164.

    They’ll adjust as needed if it’s costing the fund more than expected.

    • 0 avatar
      arach

      I could never imagine spending even THAT much on insurance. that is nuts. $2000 or even $1300 for a single car?

      $1300 should pay for 3 cars and 3 drivers!

      • 0 avatar
        rpn453

        It is a somewhat unusual system in that regard. Anybody with a license can drive any vehicle, so each vehicle is charged at a full single vehicle rate. Pricing is not discriminatory for anything except driving record, and unfortunately even that has a minimal effect.

        I know other provinces can be obscenely expensive for certain demographics to insure a single vehicle, while other demographics can insure multiple vehicles inexpensively, though usually with driver restrictions.

        It’s unfortunate that the system doesn’t charge people in direct proportion to the amount of damage they do. Insurance would cost almost nothing for good drivers if people were required to eventually pay for all the damage they cause as a condition for retaining their license.

      • 0 avatar
        golden2husky

        …1300 should pay for 3 cars and 3 drivers!..

        Really, where do you live? Fantasyland? I shell out for three cars – only one is expensive. No tickets/claims and zero commuting miles (work car provided by work) and I pay $4,000 a year. Only two drivers – me and my wife. Her record is clean and she does not commute. I’d love your suggested rate but that’s not gonna happen…

    • 0 avatar
      jmo2

      I got similar numbers in the US. I figure the study is a fraud.

  • avatar
    arthurk45

    Tesla owners are tax cheats to begin with – they MUST pay road taxes.
    I knew full well, after reading experiences by Tesla owners of their collision repair fiascos, that insurance companies would have to raise Tesla owner rates
    a lot. They will go higher still as more accidents and collision repairs are made. The Model 3 was designed to be easy to assemble, NOT easy to repair. One owner said a smal fender scratch required new parts and 3 man days labor an $6800. Another claimed a 3 MPH fender bender required $13,000. As per usual, Tesla operates a monopoly

    • 0 avatar
      mcs

      @arthurk45: Tesla owners are tax cheats, to begin with – they MUST pay road taxes.

      Really? WTF am I supposed to do? HTF do I pay them? BTW, in my state, when I get my new cars, I’ll be paying annual excise taxes on a $140k EV and an $80k EV. A lot more than someone with $19k new ICE car. I also pay the same on toll roads as ICE cars. What if I bike to work? Am I a tax cheat then?

      • 0 avatar
        Christopher Coulter

        He’s got a point… Gas taxes are usually intended for road and highway maintenance. EVs are often a bit heavier than their gas counterparts and therefore cause at least equivalent of not more wear and tear but escape one of the main methods of obtaining funds for that maintenance.

        Bikes might use the roads too, but the lightweight means they do an infinitesimal amount of damage per mile, so really not the same thing.

        Not sure how to mitigate that difference for EVs… Maybe eliminate gas taxes and pay for roads out of a general fund? But then you tax non-drivers for the roads. Maybe a scheme where we all pay a lump sum at registration based on the vehicle? But then low mileage drivers bear an unfair burden. Tricky issue…

  • avatar
    phxmotor

    The 3 is like the original Ford Falcon or Chevy Nova.
    All three entry level offerings designed to be functional but
    also designed to reek of entry level styling. Intended (?) to
    embarrass it’s driver into yearning for the next most
    expensive model. The 3 is a little stubby, it’s true. Not
    unattractive but a bit unlike the much more sleek
    Tesla’s with which we have all become accustom. It’s
    performance is it’s strong suit. Battery life will be key.
    Real honest and true battery life is the key to this hoped for
    EV renaissance upon which we are supposedly at the leading edge.
    We shall see.

    • 0 avatar
      mcs

      I was charging next to a 3 a couple of days ago. In person, it seemed sleek. It was parked next to a Leaf, so that may have had an effect. Seeing photos of one shot from 2 feet off the ground versus in person at standing height makes a difference. I really like the short overhangs in front of and behind the wheels. A nice contrast from massive front overhangs on FWD based vehicles. Some FWD vehicles look as though you could add another row of seating between the front wheels and the bumper. The stubbiness looks awesome from the side I suppose. Also, its the first vehicle I’ve seen that a front license plate actually improves the looks of the car.

      By the way, the owner has a C class and he absolutely hates driving the C class after getting the 3.

      • 0 avatar
        James2

        “Also, its the first vehicle I’ve seen that a front license plate actually improves the looks of the car.”

        Seen a couple in the flesh. Thing needs a grille*.

        *But not a Toyota/Lexus inhale-small-animals kind of grille.

  • avatar
    arach

    I own more than 8 vehicles and have never paid $2000 TOTAL for all of them, including an exotic and a 1 ton lariat.

    I couldn’t imagine paying $2000 for a single car!

    • 0 avatar
      chrishs2000

      Michigan insurance is insane. I pay $1500 for full coverage on a 2018 Accord and $600 for a 2005 Odyssey with bare minimum state coverage. Every vehicle is insured like it’s driven all the time no matter how many vehicles or drivers are in the household. It has dissuaded me from owning multiple vehicles.

      • 0 avatar
        WildcatMatt

        Michigan drivers are kneecapped by the MCCA (“Cat”) fund that provides unlimited medical coverage, which is required by the state and is a fixed amount that cannot vary based on mileage or usage.

        The bad news is, you take it in the shorts from a premium perspective if you want to have a beater for commuting and an old car for nice days.

        The good news is, if you’re in an auto accident and are left in a Terri Schiavo condition, the State of Michigan will pay for your medical care for the rest of your life.

  • avatar
    MBella

    The biggest issue with electric cars and accident repair costs is the battery. Any decent impact will likely compromise the battery and it will have to be replaced. This makes it expensive to repair. Per OSHA rules, the batteries have to be stored in very specific storage facilities if out of the vehicle more than 48 hours. This ads cost to the service facilities. These problems are not unique to Tesla. All electric vehicles have these costs.

  • avatar
    FWD Donuts

    I’ve got 1111 for six months. Charger R/T with the 5.7 is basically the same with USAA.

    No surprise insurance companies are finding out Teslas are getting into accidents. They tend to draw the worst kinds of dolts out of the woodwork here in Silicon Valley — those who think they’re smart yet have the common sense of a donut hole.

    And I’m sorry for insulting donut holes with that statement.

  • avatar
    APaGttH

    Wait, what? $2K, $3K, $4K a year for insurance on one vehicle? I have two vehicles (2011, 2017) vehicle A stickered for $58K and vehicle B stickered for $51K. My combined insurance is about $1600 a year for max coverage to support the $3 mil umbrella policy on top of that (that figure includes the umbrella policy). Who pays these rates? This is average? I even live in an urban area where car theft and break-ins is a competitive sport and a high claim rate compared to the rest of the country. Heck, our rates aren’t state regulated either. I’m reading this and I’m floored.

  • avatar
    FreedMike

    Could be a combination of a lot of things particular to the car, but the thing no one’s talking about, surprisingly enough, is the whole “autopilot” thing.

    I strongly suspect that given all the negative press we’ve seen about Tesla’s “autopiloting” themselves into oblivion, insurance companies might be pricing in that risk.

    I bet you that if this car didn’t have this feature, you’d see lower premiums.

    • 0 avatar
      Twyxx

      I’m not sure autopilot has much to do with it. From someone in the insurance business, I have had to deal with a few Teslas. The high premiums are due to how expensive they are to repair, as well as parts availability. Tesla parts are notoriously difficult to get a hold of, with some cars waiting months for parts while their owners are in an insurance-paid rental car. Along with the parts, the labor rates commanded by Tesla network body shops are on average, about double the normal labor rates paid to repair any other normal car. I’m not surprised they cost about as much to insure as a 911.

  • avatar
    jmo2

    I call bullsh*t on this study. I just called my agent for a quote. I pay $1535 for a 2008 GTI a new Model 3 would be $1872. And note I was looking at a C300 with a similar MSRP and the quote was $100 less.

    • 0 avatar
      redrum

      Yeah, I just ran a online quote through my insurer (Progressive). I replaced my 2012 Fusion hybrid with a 2018 Tesla 3 and my insurance went up…a whopping $20 over 6 months.

      Obviously insurance can vary widely based on insurer and the driver’s profile, but I don’t see any indication the Tesla 3 costs a “bundle” to insure.

  • avatar
    jmo2

    Matt,

    Can you do me a favor and call your agent for a quote? If it comes back like mine you may have a really good story on your hands.

  • avatar
    raph

    Damn it! Big Coal and Big Oil have struck again!!!!!!!!!!!!

    >>insert prairie dog meme with dramatic music<<

  • avatar
    craiger

    The government should stop insurance companies from discriminating against electric cars! Big Oil! Big Coal! Halliburton! Trump!

  • avatar
    WildcatMatt

    Keep in mind that from a parts perspective, there are likely very few aftermarket suppliers in the mix right now. And given the brand demographics I imagine most insureds would insist on OEM parts. That will have a huge impact on claim costs.

    Commenters who have gotten quotes significantly lower than the samples in the article will almost certainly have some combination of the following:

    a) An insurer who hasn’t filed new rates and/or vehicle symbols for the Model 3 yet.
    b) An above-average CBUS score and/or very low tier placement.
    c) Almost every possible discount applied.
    d) A squeaky clean record.
    e) An insurer that writes only preferred or closed-population business (eg USAA).

    It’s also worth mentioning that this article states that Model 3 rates are _increasing_. If you call your carrier and quote to add to an existing policy, you’re getting a quote based on old rates — if you called to start a new policy you might get a different rate.

Read all comments

Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • mcs: @old_shel: More complexity means more to go wrong, I’ve taken apart and put back together both computers...
  • raph: Ian Callum! The man who is responsible for the “ubiquitous modern coupe shape”! If it weren’t...
  • raph: Or GM metal brake lines for that matter. How GM has avoided a recall on older pick-ups with disintegrating...
  • slap: We had a 1998 Camry CE with 5speed manual that we donated last year. We bought it new, and it was somewhat...
  • raph: Despite what you see on the news most people are smart and not far enough on the sociopathy spectrum to realize...

New Car Research

Get a Free Dealer Quote

Who We Are

  • Matthew Guy
  • Timothy Cain
  • Adam Tonge
  • Bozi Tatarevic
  • Chris Tonn
  • Corey Lewis
  • Mark Baruth
  • Ronnie Schreiber