Tesla insurance rates hop after AAA says owners should pay more
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At least one national insurer, AAA-The Auto Club Group, is raising rates on Tesla vehicles based on data demonstrating that the Model S and Model X had abnormally high claim frequencies and high costs of insurance claims compared with other cars in the same classes.
AAA said premiums for Tesla vehicles could go up thirty percent based on data from the Highway Loss Data Institute and other sources.
Tesla is disputing the analysis.
«This analysis is severely flawed and is not reflective of reality,» the electric-vehicle maker 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.»
Anthony Ptasznik, chief actuary of AAA-The Auto Club Group, said the group noticed the anomaly in company data and then investigated other data sources, primarily relying on the Highway Loss Data Institute because of its scope, to confirm its analysis. «Looking at a much broader set of countrywide data, we spotted the same patterns observed in our own data, and that gave us the confidence to switch rates,» he said.
Model S owners are in for a rude awakening on their insurance bill soon.
Other large insurance companies, including State Farm and Geico, said that claims data is a major factor in calculating premiums, but would not disclose if their Tesla-owning customers would also see rates rise.
The Highway Loss Data Institute report covered the 2014-16 model years. Vehicles are divided into classes based on size, weight and contesting models. The frequency and severity of claims are compared with overall average claims of passenger vehicles and the average claims of the vehicle`s class. In evaluating Tesla vehicles within their categories and to the overall population of vehicles, the report found the amount and cost of claims to be much higher than average.
«Teslas get into a lot of crashes and are costly to repair afterward,» said Russ Rader, spokesman for the Insurance Institute for Highway Safety, which is the Highway Loss Data Institute`s parent organization. «Consumers will pay for that when they go to insure one.»
The Model S is classified as a large luxury vehicle, defined as cars that are ninety to one hundred ten cubic feet and inbetween Trio,500 and Four,500 pounds. Other models in this class include the Volvo XC70, Audi A6, Mercedes-Benz E class and BMW five series.
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Tesla said the Highway Loss Data Institute`s system placed it with the wrong competitors. If it were compared with similar rivals, Tesla argued, its crash data would not stand out negatively.
Tesla said the high rate of acceleration in both the Model S and Model X make it «false and misleading» to compare against vehicles such as the XC70, adding that the Model S also holds the lowest likelihood of injury, according to an evaluation by the National Highway Traffic Safety Administration.
«We expect Model X to receive the best score for any SUV ever tested,» a Tesla spokesperson said.
Collision harm claims for large luxury vehicles are reported thirteen percent more frequently than average, and those claims cost about fifty percent higher than average, the Highway Loss Data Institute said. The rear-wheel-drive Tesla Model S is involved in forty six percent more claims than average, and those claims cost more than twice than average, it said.
In the large luxury SUV class, where collision coverage claim frequency is the same as the average for all vehicles and the cost of claims is forty three percent above average, the owners of the Model X file for claims forty one percent more often than average, and those claims cost eighty nine percent more than average, according to the institute.
Insurance for the Model three might share the same fate as the Model S and X when it comes out because of the similarities.
Fresh approaches to calculating premiums may eventually benefit Tesla owners.
Root is an insurance startup licensed to operate in Ohio, Arizona and Oklahoma that sets premiums based on individual driving behavior. Customers download the Root app and drive with their smartphone in the car for two weeks. Rates are determined from the habits observed over that period.
Semiautonomous driving features help bring rates down, said Root CEO Alex Timm. The company gives a special discount for Tesla vehicles tooled with Autosteer – part of Tesla`s suite of Autopilot semiautonomous tech – which NHTSA found diminished crash rates by forty percent.
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«Insurance premiums should reflect risk,» Timm said. «Autonomous vehicles are safer and will proceed to get safer. It`s proven in the data.»
Tesla said that it is working with insurance companies to decently evaluate the benefits of Autopilot.
«As part of the Insure My Tesla program, Tesla is working with leading insurers resulting in lower prices for Tesla insurance, not higher,» Tesla said in its statement. «These leading insurers also appreciate the added safety benefit of Autopilot.»
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