Tesla Takes Pride in Its Own Car Insurance, Customers Say Otherwise

Nov 21, 2023 10:56 PM EST

Under Elon Musk's inspiring leadership, Tesla has a track record of garnering headlines with its audacious claims and revolutionary technologies. One of the intriguing markets that Tesla entered was auto insurance.

Elon Musk, Tesla's Car Insurance

To revolutionize the business, Tesla's in-house insurance was released in mid-2019, using the company's AutoPilot technology and delivering same-day crash repairs, cheap rates based on individual driving behavior, and remarkably low monthly premiums.

Jalopnik cited Reuters report, that a new in-depth study by Reuters indicates that Tesla's move into the insurance industry appears to follow the company's track record of overpromising and underdelivering. This calls into question the viability of Tesla's insurance offers as well as the challenges of keeping such grand promises.

Reuters also reported that due to a shortage of personnel, certain customers experienced delays of several weeks or even months in receiving compensation, all while they were still required to make payments for their damaged vehicles.

Customer's Feedback, Experience

Many Tesla Car Insurance customers, including Mark Bova, have had a vastly different and deeply unsatisfactory experience compared to the promises made by Elon Musk's company. Bova's story illustrates the frustration customers have faced. After purchasing Tesla's insurance and experiencing an Autopilot malfunction that led to a serious accident just over two weeks later, Bova found himself battling with the insurer.

According to the report, he endured a seven-month wait for payment on his totaled vehicle and is still awaiting compensation for approximately $50,000 in medical expenses, involving multiple frustrating interactions with Tesla's product liability department, including long wait times, dropped calls, and unfulfilled promises of callbacks.

Bova's ordeal is not unique, as numerous other Tesla Insurance customers have shared similar tales of difficulties in dealing with the company, underscoring a pattern of customer dissatisfaction and frustration.

Tesla Insurance faced significant challenges as it struggled to meet the demands of its numerous customers, with adjusters grappling to handle the workload, causing delays in processing claims that stretched for months. While the exact number of Tesla-insured vehicles remains undisclosed, records from the California Department of Insurance indicated coverage for "more than 50,000 vehicles in the state" by late 2021, resulting in widespread customer dissatisfaction, evident in social media complaints, online posts, and interviews conducted by Reuters with several policyholders.

While some policyholders appreciated the insurer's low premiums, others shared grievances similar to Mark Bova's experience, describing prolonged waits for payouts and repairs, compounded by the difficulty in reaching claims adjusters.

Adding to Tesla Insurance's challenges, the introduction of automatic rate hikes based on "Safety Scores" derived from real-time vehicle data stirred controversy. These scores, meant to analyze driver behavior and adjust premiums accordingly, have led to two class-action lawsuits alleging that Tesla's sensors generate false collision warnings, which in turn lower the scores and inflate premiums.

One policyholder not involved in the litigation, echoed these concerns, citing safety-system malfunctions, including false warnings and sudden braking incidents. She noted a nearly 50% increase in her monthly premium, expressing dissatisfaction with the calculation of the safety score, asserting that it evaluated her based on a system that was not functioning correctly.