Tesla strikes another deal that shows it's about to turn the car insurance world upside down
- Tesla has created a customized insurance package, InsureMyTesla, that is cheaper than traditional plans because it factors in the vehicles' Autopilot safety features and maintenance costs.
- InsureMyTesla has been available in 20 countries, but Tesla just recently partnered with Liberty Mutual to make the plan available in the US.
- InsureMyTesla shows how the insurance industry is bound for disruption as cars get safer with self-driving tech.
Tesla struck a deal with Liberty Mutual to create a customized insurance package - and the move shows how the electric automaker is intent on disrupting the insurance industry.
The new plan is called InsureMyTesla and was designed specifically for Tesla vehicles. Its benefits include replacing Teslas damaged beyond repair within one year. Tesla launched the package on October 13 in the US in all 50 states, but it already exists in 20 other countries, a company representative confirmed.
Electrek first reported on the news.
Tesla started quietly rolling out the InsureMyTesla program in February in Hong Kong and Australia. The electric car maker partners with different insurance companies across the globe to offer InsureMyTesla, which lowers overall insurance costs by factoring in the vehicles' Autopilot safety features and maintenance costs.
Tesla CEO Elon Musk has said that insurance agencies should adjust their prices for Tesla vehicles because the cars come with Autopilot, the company's advanced driver-assistance feature.
The National Highway Traffic Safety Administration found that crash rates for Tesla vehicles have plummeted 40% since Autopilot was first installed. Electric vehicles also generally require less maintenance then traditional, gas-powered vehicles.
"If we find that the insurance providers are not matching the insurance proportionate to the risk of the car then if we need to we will in-source it," Tesla CEO Elon Musk said in February.
Tesla's partnership with Liberty Mutual marks the first time the InsureMyTesla package has been available in the US. The US launch comes a few months after AAA said it would raise rates for Tesla owners after seeing a high frequency of claims among Model S and Model X owners.
AAA based its decision based on data provided by the Highway Loss Data Institute, an analysis that a Tesla spokesperson said was "severely flawed" at the time.
The deal with Liberty Mutual shows how US agencies are starting to realize that they must adjust their prices as cars get safer with advents in self-driving tech.
Insurers like Cincinnati Financial, Mercury General, and Travelers have noted in SEC filings that driverless cars could threaten their business models, according to a 2015 Bank of America and Merrill Lynch report.
The personal auto insurance sector could shrink to 40% of its current size within 25 years as cars become safer with autonomous tech, according to a report by the global accounting firm KPMG.
Tesla hopes to one day bundle the price of insurance and maintenance into the price of future vehicles.
"It takes into account not only the Autopilot safety features but also the maintenance cost of the car," Jon McNeill, Tesla's vice president of sales and services, has said of InsureMyTesla. "It's our vision in the future we could offer a single price for the car, maintenance, and insurance."