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Why Are Teslas More Expensive To Insure?

by Clint | Published: September 27th, 2022
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Have you ever wondered why it is that it costs so much more to insure a Tesla than it does to insure many of the other luxury EVs currently available on the market?

Well, the simple answer is that the purchase price of a Tesla is higher than the price of a comparable EV and that it costs the insurance companies considerably more to repair or replace a Tesla in the event of an accident or if the car is stolen.

How Do Insurance Companies Set Their Prices?

Tesla Supercharging
<a href=httpswwwflickrcomphotosjurvetson8734320392>Photo<a> by Steve Jurvetson licensed under <a href=httpscreativecommonsorglicensesby20>CC BY 20<a>

While some might argue that there is no exact science involved in setting the cost of car insurance, and it’s simply based on how much the insurance companies think they can get away with, the process goes much deeper.

The benchmark all insurance companies use for calculating the individual cost of car insurance per person is primarily decided by how big of a risk they think the driver poses to them, along with the likely cost to replace or repair the insured vehicle and to do this; they usually use some or all of the following criteria;

The Different Types Of Car Insurance Available

As you can imagine, around the globe, there is a considerable number of different types of car insurance available; in the UK, for example, there are three standard levels of car insurance available;

United Kingdom

TESLA Model 3 Paris taxi
<a href=httpswwwflickrcomphotostrabantino52338297241 rel= class=broken link>Photo<a> by TRABANTINO under <a href=httpscreativecommonsorglicensesby20>CC BY 20<a>

Fully Comprehensive Insurance

Considered the highest level of insurance available, fully comprehensive car insurance typically covers the driver, the car, and any others involved in an accident. The policy will generally include third-party fire and theft and possibly compensation for medical treatment, legal expenses, and accidental damage. However, although this type of policy offers the highest level of coverage, it isn’t necessarily the most expensive.

Third-Party Insurance

Third-Party insurance cover is the current legal minimum available. This type of policy covers the driver for the costs of injury or damage caused to other people or their property. But it doesn’t offer any protection if the driver’s car is damaged or stolen. Third-party insurance is ideal for drivers who find the annual cost of fully comprehensive insurance outside their budget. However, while it may be cheap, it is not necessarily the cheapest.

Third-Party, Fire, and Theft

As with third-party insurance, the policy covers other people but doesn’t protect the driver if their car is damaged. It differs because it covers repairs or replacement if the vehicle is stolen or damaged by fire. Again, it’s not necessarily less expensive than a fully comprehensive policy.

United States

Tesla Model X 90D

Whereas in the US, there are considerably more comprehensive choices of car insurance/coverage available, and the most common names for many of these policies are listed below;

Liability Coverage

Liability insurance is mandated in most US states as a legal requirement to drive a car. It may assist in helping to cover damages for personal injuries and or property damage to others for which the driver has become legally responsible resulting from a car accident.

Uninsured and Underinsured Motorist Coverage

Uninsured and Underinsured Motorist Coverage is useful when you are involved in an accident where the driver of the other vehicle doesn’t have insurance.

This type of insurance policy is there to assist you with paying any hospital expenses incurred or, as is the case with some states, the damage, and repairs to your car.

In some states, uninsured and underinsured motorist insurance is a legal requirement; in others, it’s optional.

Comprehensive Coverage

While comprehensive insurance is, in many cases, optional, if you have financed the purchase of the vehicle via a third party or if you’re leasing the car, it may well be required.

Comprehensive insurance may also assist you by covering the damage to your car due to vehicle theft, fire, weather, or trashing. If a hazard damages your vehicle, comprehensive coverage can occasionally fund your vehicle’s repair or a replacement vehicle if required.

Collison Coverage

Tesla accident
<a href=httpswwwflickrcomphotoschrisyarzab50880568461 rel= class=broken link>Photo<a> by Chris Yarzab under <a href=httpscreativecommonsorglicensesby20>CC BY 20<a>

If a situation arises where you’re implicated in an accident where another vehicle is involved or you hit something stationary such as a parked car or a tree. Then collision coverage may help fund your vehicle’s repair cost or replacement.

Typically collision coverage is an optional policy. However, it may be a mandated requirement by your leaseholder or lender for your vehicle.

Medical Payments Coverage

Required in some parts of the country but optional in others. A medical payments coverage policy is there to help with the cost of any hospital or medical treatment needed by you or any passengers or members of your family who were driving the insured vehicle and were hurt as a result of an accident.

Personal Injury Protection or PIP

Like medical payments coverage, PIP or Personal Injury Protection coverage is legally required in some states but optional in others. PIP as a policy may help to fund the cost of any medical or hospital expenses after an accident. In addition, Personal Injury Protection (PIP) may also help cover any other external costs that arise because of injuries, such as daycare for children or loss of income.

What Is The Current Average Insurance Cost For A Tesla?

White EV Charging

Well, according to the top car insurance online price comparison websites in both the UK and the US, the average annual cost of insurance for a Tesla model year 2022 currently looks something like this;

Tesla Model 3£985$3386
Tesla Model S£3177$4956
Tesla Model X£2495$4275
Tesla Model Y£808$3057

However, you must remember that these are average prices and that to insure any Tesla will depend on many of the factors outlined earlier in this article. 

But it’s not all bad news; whilst these numbers are higher than the majority of comparable EV insurance policies, Tesla car insurance does typically come with an additional extra cover that includes the following;

How Do Tesla Insurance Prices Compare With Other EVs?

car charger
<a href=httpswwwflickrcomphotos132646954N0230032293895 class=broken link>Photo<a> by Falco Ermert licensed under <a href=httpscreativecommonsorglicensesby20>CC BY 20<a>

The current average cost to insure an electric car in the UK is approximately £629 and $2280 in the US. However, when it comes to more comparable EV models such as those from BMW, or the Jaguar I-Pace the landscape looks something like this;

BMW 330e£608/$1642
BMW i3£636/$1675
BMW 530e£675/$2543
Jaguar I-Pace£899/$2381
Porsche Taycan£1085/$2366

However, again please remember that these are average online prices and that the actual cost to insure any of the models listed here will depend on many of the circumstances we outlined earlier in this article.

Will Tesla Insurance Continue To Be Expensive?

charging tesla

Sadly it does appear that Tesla insurance prices will continue to rise and be considered expensive in the short term.

However, they are not alone; car insurance around the globe increased by approximately 6% over the last 12 months.

It will likely continue to rise throughout the coming months, wiping out the reversal of the steady fall seen during each quarter of last year.

And while some of this increase can rightly be apportioned to the rise in inflation. The Association of British Insurers suggests other factors could be at play, including the steady rise in the value of used cars and an increase in the growing number of road accidents since the slowdown in the worldwide pandemic.

As things currently stand and resemble some form of global normality, there’s an increase in all road traffic, meaning a continuing rise in the increasing number of car insurance claims. And this is echoed by how much drivers are expected to pay for their car insurance. 

So Are Teslas More Expensive To Insure?

<a href=httpswwwflickrcomphotosdalecruse32669180087>Photo<a> by Dale Cruse licensed under <a href=httpscreativecommonsorglicensesby20>CC BY 20<a>

When it comes to car insurance and deciding whether or not Tesla car insurance is more expensive than other EVs, unfortunately, the matter will always be subjective, and while some might consider paying £4087.00 to insure a Model S, a little on the high side. Spare a thought for anyone who buys a limited edition Lotus Evija

Considered one of the most expensive electric vehicles in the world, the Lotus Evija comes with a starting price of £1.7 million and could easily attract an annual insurance payment of £35,000, which is probably okay if you’re a premium league footballer, but that’s about all. So, as we said, it’s all subjective when it comes to the individual price of car insurance.