"Bad Idea" To Buy Car Insurance From Your Car's Company Like Tesla's Case

Some people in the 2023-2024 Tesla Model Y Owners Club, who want to purchase their car insurance from Tesla, say Tesla is getting very expensive to insure because of high repair costs.

"After reading some posts about Tesla insurance, I did go get a quote. My insurance is to renew in 2 weeks. Tesla came in double what I am paying now, had a higher deductible, and no medical payments. II have very low driving mileage and an impeccable driving record. What are they thinking? Good luck on this to everybody," wrote Rosemary Tanfani, a group member and a possible Model Y owner.

A few people wrote back and echoed Tanfani's experience, but one of them, named Douglas, said it's a bad idea to buy car insurance from your carmaker.

"Bad idea to buy insurance from the car maker who can then use how you drive to determine your rates. I’ll drive as I like and it’s none of their business," wrote Douglas and I think he has a point.

Advantages and Disadvantages of Buying Car Insurance from a Carmaker Like Tesla

Advantages

• Potential for lower premiums: Tesla, for example, uses a "Safety Score" system to determine rates, which can reward safe driving habits with lower premiums. This can incentivize safe driving.
• Convenience: Buying insurance from the same company as your car might streamline the claims process and offer other conveniences.
• Specialized coverage: Carmakers might offer specialized coverage tailored to their vehicles, such as coverage for specific high-tech components.

Disadvantages

• Data privacy concerns: As Douglas mentioned, carmakers can collect data on your driving habits, which might influence your insurance rates. This raises concerns about privacy and control over personal information.
• Limited competition: Relying on a single insurer might limit your options for comparing rates and coverage.
• Potential conflicts of interest: In case of a dispute, there's a risk that the carmaker/insurer might prioritize their own interests over the customer's.

Douglas's concern about privacy is valid. He values his freedom to drive as he pleases without being monitored and penalized for his driving style. This raises a broader question about the balance between using data to incentivize safe driving and protecting individual privacy.

Ultimately, the decision to buy insurance from a carmaker is a personal one.

It depends on individual priorities, such as the importance of privacy, cost-savings, and convenience. Comparing rates and coverage from different insurers is crucial to making an informed decision.

Would you like to compare Tesla insurance to traditional insurance providers?

Armen Hareyan is the founder and the Editor in Chief of Torque News. He founded TorqueNews.com in 2010, which since then has been publishing expert news and analysis about the automotive industry. He can be reached at Torque News Twitter, Facebook, Linkedin, and Youtube. He has more than a decade of expertise in the automotive industry with a special interest in Tesla and electric vehicles.