Tesla has started rolling out its insurance plans in a handful of US states over the past few years, as one more piece of the company’s growing ecosystem. Though still in its infancy, Tesla Insurance could be crucial to keeping rates low and driver safety high, as a few of the automaker’s executives have detailed in recent months.
Tesla CEO Elon Musk weighed in on the automaker’s new insurance plans in a recent All-In podcast last month, as reported by Bloomberg. During the conversation, Musk talked about using real-time driving data to determine safety scores — a move that both lowers Tesla’s rates from typical insurance rates and incentivizes drivers to drive more safely.
The safety score in question is measured using five criteria: forward collision warnings every 1,000 miles, hard braking, aggressive cornering, dangerous following and forced autopilot disengagement. User safety scores start at 90 out of 100, increasing or decreasing based on driver behavior. This model also excludes traditional factors car insurance companies usage, such as age and credit score.
Part of the benefits of Tesla’s insurance model is how it simplifies the process of determining rates, as evidenced by the safety score that can be measured based on real-time driving. As Musk explained in a recent interview with All-In, the current auto insurance system isn’t very efficient, by comparison.
“The auto insurance industry is incredibly inefficient,” Musk said at the recent All-In Summit Miami event he joined via an online live stream. “You have so many intermediary entities, from insurance agents to the final reinsurer, that there are like half a dozen companies each taking a share.”
Currently, Tesla’s insurance services are only available in Arizona, Colorado, Illinois, Ohio, Oregon, Texas and Virginia, in addition to California, where the automaker does not use the driving behavior in real time.
Upon entering Texas, Tesla Chief Financial Officer Zachary Kirkhorn – seen internally as the passionate driving force behind the insurance project – said the automaker’s insurance had immediately become the state’s second-largest insurer. While Tesla only offers its insurance services in eight states at the moment, coverage is expected to reach at least 80% of the United States, before expanding internationally.
Only time will tell how Tesla’s insurance plans will actually affect driver safety, especially as it extends to much of the rest of the United States. But the incentive for policyholders to drive well for lower fares seems impenetrable, and with drivers already used to using the Tesla mobile app and the entire business ecosystem, it is likely to be heavily used by new customers in the years to come.
Originally posted on EVANNEX. by Zachary Visconti
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