Tesla owners with an AAA insurance policy may have to pay an additional 30% premium, the insurance company said.A comparison to a station wagon appears to be an affront to Tesla, as the automaker is actively trying to differentiate itself from traditional cars and eschew long understood beliefs about a vehicle — like the rate of depreciation.
Autopilot, Tesla’s self-driving software which can be automatically updated, is part of the reason. The software gathers driving data generated from the thousands of drivers and the millions of miles accumulated on the road. The company has not been coy about its goals to produce autonomous vehicles, and as self-driving technology accelerates, that vehicle data can be pushed from Tesla headquarters to every vehicle on that network.
“If a single Tesla vehicle learns to avoid hitting a cow in Christchurch, New Zealand, it can upload that to the Tesla cloud and share it with every other Tesla vehicle worldwide,” a recent RethinX report said. “Overnight, all Tesla vehicles will know how to avoid hitting a cow.”
This means that as more Tesla vehicles get on the road, a single vehicle could be safer as it learns from thousands of other vehicles. Therefore, premiums should be lower than traditional vehicles as cars learn to become safer.
Some insurance companies, like Ohio-based Root Insurance, are trying to be ahead of the curve on this continuously improving technology. Root offers discounts to Tesla drivers with the Autopilot feature because they crash less, the company claims.
A graph from National Highway Traffic Safety Administration on the rate of Tesla crashes after the introduction of Autopilot.
“According to a recent report from the National Highway Traffic Safety Administration, the crash rate of Tesla vehicles plummeted almost 40% after Autosteer (Tesla’s “self-driving” software) became available,” the company website states. “Root believes that falling crash rates means the car insurance industry should adjust rates in response.”
“Further, this technology is improving every day, and we believe the long-term insurance costs will continue to decline for vehicles with semi-autonomous technology,” Alex Timm, chief executive of Root, told Mobility Finance.
Tesla also operates an Insure My Tesla program, where the automaker works with insurers, “Resulting in lower prices for Tesla insurance, not higher,” Tesla said in its statement.
At the moment though, the cost of an individual vehicle is rising — and with the contents and technology of autonomous vehicles being more expensive than in average vehicles — any crash would result in more financial damage, James Lynch, an actuary with the Insurance Information Institute, told Mobility Finance. This means that premiums are likely to stay high, even if crashes themselves decrease.
“Right now, premiums are rising in automobile insurance; for a while accident rates had been increasing, but recently the size of the claims have been growing, so premiums have been going up [in response],” Lynch said, adding that when it comes to new technologies like Autopilot, insurance companies will do as much as they can to find out what it means for a vehicle’s risk of being in an accident.
