Tesla Owners Should Pay More, Not Less, For Car Insurance, Says AAA

Advocates for autonomous cars argue they will put car insurance companies out of business because they will reduce the number of auto accidents dramatically, leading to a greatly reduced claims experience. 

Autopilot Is Safer

Systems like blind spot detection and emergency forward braking, combined with lane-keeping features, should dramatically lower the number of car accidents. In China and other markets, Tesla is already bundling the cost of insurance into the purchase price of its cars in cooperation with insurance partners which accept the company’s claims that its cars are inherently safer thanks to its Autopilot system.

High Costs Of Repair

Not so fast, says AAA. While the future may be sunny and bright, right now, it says the Tesla Model S and Model X have a higher than normal claims history and that both cars cost more to repair than other vehicles. Accordingly, it is charging Tesla owners more for insurance than it charges other drivers.

Predictably, Tesla has reacted strongly to the announcement by AAA. “This analysis is severely flawed and is not reflective of reality,” the company said in an email, “Among other things, it compares Model S and X to cars that are not remotely peers, including even a Volvo station wagon.” Oh, the horror!

AAA Justifies Its Position

Anthony Ptasznik, chief actuary for AAA, said his organization noticed the anomaly in Tesla claims data, then reached out to other car insurance leaders to confirm that what it was seeing was the same as what others were experiencing. Among others, it contacted The Highway Loss Data Institute, a division of the Insurance Institute for Highway Safety. “Looking at a much broader set of countrywide data, we saw the same patterns observed in our own data, and that gave us the confidence to change rates,” Ptasznik said.

The HLDI says its data supports the AAA findings — the amount and cost of claims by Tesla owners are much higher than average. “Teslas get into a lot of crashes and are costly to repair afterward,” said Russ Rader, spokesman for IIHS. “Consumers will pay for that when they go to insure one.”

The Classification Problem

The Model S is classified as a large luxury vehicle, which is defined as cars that are 90 to 110 cubic feet and between 3,500 and 4,500 pounds. Other models in this class include the Volvo XC70, Audi A6, Mercedes-Benz E class, and BMW 5 series.

Tesla claims that HLDI has classified its cars incorrectly. It says its cars are capable of accelerating much more quickly than any of those other vehicles and that makes comparisons inaccurate. If classified properly, the claims experience for Tesla cars would be similar to others in its class, says Tesla, without specifying exactly what cars it considers comparable.

Tesla says its cars are among the safest on the road when it comes to protecting people from injury. That may be true, but repairing a Tesla after a collision can be heartstoppingly expensive. According to HLDI, the number of claims for all large luxury vehicles is 13% above average and the cost of repair is 50% higher than average. By contrast, the Tesla Model S with rear wheel drive has 46% more claims and repairs cost 100% more than average.

Body Damage Vs Damage To Bodies

Clearly, AAA and Tesla are talking past each other in this discussion. AAA is talking about the cost of repairing collision damage. Tesla is talking about personal injury claims. It is fairly well known that the Tesla Model S and Model X are made 100% from aluminum, which is more expensive to repair than steel body cars.

To make matters worse, until quite recently, Tesla has required any body repair shops that want to be certified by Tesla to send its repair personnel to California to be trained by company representatives and to use only repair tools approved by Tesla. That commitment costs repair facilities a lot of money, which must be recouped via higher than normal repair costs. Tesla says it will now train repair specialists online.

Who’s Right — AAA Or Tesla?

And the winner is — a draw. Tesla does build very safe cars. It also builds cars that are more expensive to repair than most. In this dispute, both sides are correct. But until all cars are self driving and collisions are virtually eliminated, don’t expect your car insurance premiums if you purchase or lease a Tesla to be negligible.

Source: Automotive News