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Tesla has decided to go into the auto insurance business

Bruce Brown
By

Tesla Model S
Tesla just opened a new profit center. Because the configuration and upgrade complexities of Tesla’s all-electric vehicles don’t seem to fit conventional insurance plans, Tesla has now entered the car insurance business, according to Electrek.

The InsureMyTesla program will be available for Tesla vehicles only. At first, the insurance is going to be offered to Tesla owners in Australia and Hong Kong. In each country, Tesla is partnering with larger, traditional insurance companies that will underwrite the InsureMyTesla policies. In Australia, Tesla is partnering with QBE Insurance and in Hong Kong the underwriter is AXA General Insurance.

In the past, Tesla owners who have checked their policies have at times discovered they were being charged for vehicles with power and trim levels that differed from what they actually owned. Owners charged for greater levels would be paying too much money, while those charged for incorrectly lower levels wouldn’t have the coverage they needed.

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Tesla’s software-upgradeable features also apparently don’t fit into current insurance templates. For example, if you buy a Tesla Model S 60 with a 60kWh battery, the actual battery capacity in the car is 75kWh but it’s not accessible without an upgrade. You can turn it on by paying $9,000 for an upgrade, but a conventional insurer would have no way of knowing about the change. Autopilot can also be turned on at a later time by paying for an upgrade, which some insurers might view either more or less favorably depending on their understanding, experience, and underwriting policies for driver assistance features.

The InsureMyTesla plan has several unique features. If a totaled vehicle is less than 36 months old, insured owners would get a new vehicle of the same model and series. Tesla Home Wall connector damage is covered. Owners can choose any authorized Tesla repair facility for fix damaged vehicles. The car is also insured for any driver.

According to Electrek, Australia Tesla owners have been offered InsureMyTesla plans priced starting at $900 a year.

The insurance industry in general, government regulators, and the automotive industry all expect that once self-driving cars become common the numbers of crashes and fatalities will be slashed. Driver error figures in 90 percent of all accidents today, according to the U.S. National Highway Traffic Safety Administration.

We’re a few years off from seeing level 4 (mostly self-driving) and level 5 (totally self-driving) vehicles, but when they become common, insurance companies will need to make many adjustments. It makes sense for Tesla to get involved with car insurance as it strives to be a total mobility and energy solution.

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