Elon Musk-led automotive and energy company Tesla has introduced its much-awaited motor insurance product in California, the US.
The recent development follows an April announcement when Musk, during the company’s earnings call, said that Tesla is creating its own insurance product.
Musk claimed that the premium of the new motor insurance plan is approximately 20% cheaper compared to the existing ones. However, he declined to share the comparisons.
Information available with the California Department of Insurance web portal indicates that Tesla has been licensed to act as an insurance broker on behalf of the State National Insurance Company.
Tesla will provide complete coverage as well as claims processing services to insurance customers in California.
The company will expand its insurance offering to the other US states in near future.
At present, Tesla’s insurance is limited to its own vehicles and does not cover commercial use including ride-sharing or car-sharing services.
The premium of the new motor insurance will consider the driving habits and other factors including use of anonymised data obtained from its global fleet.
Ian Sweeney, GM of Mobility at Trov, said: “Tesla has taken advantage of a great opportunity facing the mobility and insurance industries – the ability to leverage data and features of today’s cutting edge mobility technology to inform and reduce the cost of insurance. We’ve been partnered for several years with brands like Waymo and Free2Move (Groupe PSA’s car-sharing service) to offer insurance on their autonomous and fleet vehicles and our technology allows us to adjust insurance premiums based on real-time data associated with each vehicle’s current risk state.
“Case in point: Free2Move is already seeing 30% savings over traditional insurance costs.
“Tesla can quantify the risk more precisely to offer lower prices by leveraging the information and features available to them as the manufacturer of the vehicles. Whether or not they should underwrite their insurance remains to be seen. Regardless, this is just the first such move you’ll see in the industry towards leveraging technology and environmental data to drive efficiencies and cost-savings. The role of protection is evolving along with autonomous mobility, and we will see the insurance industry change as a result. Those who aren’t leveraging data, and the modern technology insurtechs can provide will get left behind.”