Tesla is making a significant change to its insurance offerings in California, taking the underwriting process into its own hands. The company recently announced that its new insurance program in the state will now be underwritten by Tesla Insurance Company rather than State National Insurance Company, which has been handling policies up until now.
To encourage existing policyholders to make the switch, Tesla is offering a limited-time incentive: a one-time 3% discount on the next term’s premiums for those who transition to the new program
Tesla Insurance was first introduced as a way to provide more affordable, Tesla-specific coverage to owners while leveraging the company’s deep knowledge of its vehicles. The automaker claims that its insurance policies offer competitive pricing thanks to real-time vehicle data and repair cost efficiencies.
However, California has long been an outlier in Tesla’s insurance program. While Tesla Insurance in other states adjusts premiums based on real-time driving behavior, measured through the company’s Safety Score system, California’s strict privacy laws prevent the use of this data in insurance pricing. This means Tesla’s insurance offering in the state has operated differently from its programs in other parts of the country.
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By bringing underwriting in-house, Tesla gains greater control over pricing and claims management, which could eventually translate into cost benefits for policyholders.
How to Switch and Claim the Discount
Tesla’s existing insurance customers in California can opt to switch to the new underwritten policy by Tesla Insurance Company. Those who make the switch will receive a 3% discount on their next term’s premiums. However, the window to claim this discount is limited, as customers must elect to switch at least four days before March 14 to be eligible.
The transition is expected to be seamless for existing policyholders, as Tesla already offers its insurance services through the Tesla app. Customers can manage their policies, file claims, and make payments directly through Tesla’s interface.
Expansion of Tesla Insurance
Tesla Insurance has not expanded to a new U.S. state in over two years, with its last expansion occurring in November 2022 when it launched in Minnesota. Between October 2021 and November 2022, the service grew rapidly, entering 11 states within just 13 months. There were expectations for a Florida launch in 2022, but that has yet to materialize, and there has been little to no update on further expansion from the company since then.
While expansion has stalled, the company did recently introduce a discount in Texas and Arizona for drivers who use its Full Self-Driving (FSD) system for a significant portion of their trips.
Additionally, Tesla has signaled its interest in expanding its insurance business globally. The company recently registered a brokerage in China, which suggests that an international expansion of Tesla Insurance may be on the horizon.
