Tesla enters car insurance business as self-driving cars prepare to disrupt the industry

Self-driving cars will almost completely eliminate the occurrence of car accidents caused by humans, which represents about 90% of all car accidents in the U.S. according to NHTSA. Consequently, autonomous driving has the potential to save millions of lives and millions in repair costs around the globe every year. That’s great for almost everyone except the car insurance industry.

This upcoming disruption makes this news particularly interesting considering it’s coming from a leader in autonomous driving technology. Electrek has learned that Tesla is entering the car insurance business starting with new programs in Australia and Hong Kong.

The new program is called InsureMyTesla and it features custom insurance plans for the company’s vehicles underwritten by bigger insurers partnering with Tesla.

In Hong Kong, Tesla is partnering with AXA General Insurance and in Australia, the automaker released its new plan with QBE Insurance.

Tesla lists some of the benefits of its custom plan, like coverage for its home charger:

• New vehicle replacement of same model and series (applicable to new and demo vehicles) if vehicle is less than 36 months from first registration
• Coverage for Damage incurred to the Tesla Home Wall connector
• Choice of authorised Tesla repairer
• Any driver policy
• Easy to understand pricing for improved Total Cost of Ownership

Here’s the new brochure for the plan:

In Australia, some owners have reported being offered plans starting at $1,200 AUD per year (~$900 USD).

Aside for the upcoming complexity of insuring autonomous vehicles, which shouldn’t be a problem for the next year or two, Tesla already has caveats in its vehicle lineup that can make it more difficult for insurers to come up with a comprehensive plan.

As we’ve reported in the past, insurers weren’t listing the trim levels of the Model S correctly, which resulted in several owners overpaying for their plan.

Tesla’s software-limited battery packs are also problematic for insurers. Tesla basically sells two vehicles with the same value, Model S (or X) 60(D) and Model S (or X) 75(D), for different prices because the battery pack of the former is the same as the latter, but software-limited to 60 kWh.

If something happens to a Model S 60 and it is totalled, the value of the vehicle needs to be attached to the price paid (a 60 kWh battery pack) even though it was a 75 kWh battery pack that was destroyed.

It makes sense for Tesla to be more involved in the insurance process considering these complexities.

As far as we can tell, the new program is currently only available in Australia and Hong Kong. We reached out to Tesla representatives to ask if it’s available in more markets and if they have any plan for an official rollout. We will update if we get an answer.