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Why Is Tesla Insurance So High? Your Questions Answered

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by Nick Versaw Updated April 26th, 2022

Why is Tesla insurance so high: couple looking at an electric dashboard

Budgeting for a new Tesla takes a little bit of planning. While the cheapest Tesla model is less than half the price of the most expensive models, it still costs more than similar EVs — and there are other factors to consider too, like the cost of auto insurance.

Although buying an electric car can save you money in the long run, Teslas are known for having higher insurance costs than non-Tesla EVs. That’s partly due to factors that are outside of your control — like the fact that Teslas are considered high-end luxury vehicles — but there are still some steps you can take to lower your premiums.

If you’re wondering, Why is Tesla insurance so high? read on to find out what factors affect Tesla insurance costs and how to choose the right policy for you. 

Additionally, enter your ZIP code here to get insurance quotes from multiple companies and find the best car insurance rates in your area:


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Why Is Tesla Insurance So High Compared to Other EVs?

New Tesla owners have a lot to appreciate: a powerful battery pack with a range of up to 400 miles on a single charge, and a 5-star safety rating from the National Highway Traffic Safety Administration (NHTSA).

You’ll also get an eight-year/100,000-mile warranty on the battery pack, so you can expect a replacement if anything goes wrong.

One thing that’s less welcome is the high cost of insurance for Tesla vehicles. Although electric cars are known for having higher insurance premiums in general, Tesla vehicles may cost even more to insure than your average EV.

Why is Tesla insurance so high? There are a few contributing factors:

Tesla Vehicles Are Expensive

The first reason is simply that Teslas are expensive, and high-end luxury cars always cost more to insure than budget-friendly vehicles. Insurance companies may consider these cars more costly to repair if they get damaged in an accident, as well as more likely to be the target of theft.

The Tesla Model 3 starts at just over $40,000, while the Tesla Model Y costs around $55,000, and the Tesla Model X can cost $100,000 or more. If you add on any extra features, such as the Full Self-Driving Capability, that can increase the value of your vehicle even more, driving up your insurance prices.

Since some of the most popular electric vehicles like the Nissan LEAF cost less than $30,000, it’s only natural that they would be cheaper to insure than a Tesla. That said, other luxury EVs like the Porsche Taycan can also be expensive to insure.

Teslas Use Specialized Parts

Electric vehicles may be cheaper to maintain than conventional cars, but that doesn’t mean they’re cheaper to repair if they get into an accident. For starters, if the battery pack or driver assist technology gets damaged, it can be expensive to replace.

Tesla vehicles in particular have higher repair costs due to their specialized parts, which your car insurance company will have to cover if you get into an accident.

While many vehicles can be repaired with generic aftermarket parts, the components of a Tesla vehicle are harder to find, and therefore pricier. For example, some Teslas are built with an aluminum frame instead of the steel frame used in most vehicles.

Not All Mechanics Service Teslas

In addition to paying more for specialized parts, you may also have to take your car to a specialized mechanic or body shop. Tesla has its own network of Tesla Service Centers, as well as Tesla-Approved Collision Centers that can provide cosmetic repairs.

This may increase the amount of time your Tesla is out of commission, leaving your insurance provider to cover the cost of a replacement vehicle.

How Much Does It Cost to Insure a Tesla?

Man talking on the phone while charging his car

With that in mind, how much does it actually cost to insure a Tesla? While all of these factors might make it sound like Tesla insurance costs are astronomical, the reality is that insuring a Tesla can cost between $2,000 and $3,000 a year.

That’s not cheap, but it could be offset by savings in other areas, since you won’t have to pay for gas, oil changes, and other routine maintenance costs.

Tesla has also begun developing its own insurance products, which include collision and comprehensive coverage. The Tesla car insurance policy covers electronic key replacement, wall chargers, and even non-Tesla vehicles.

Currently, it’s only available to Tesla drivers in five states — California, Arizona, Illinois, Ohio, and Texas — so depending on where you live, you may want to stick with one of the major insurance providers, like State Farm, GEICO, or Progressive.

The best way to calculate your car insurance costs is to request a quote. By shopping around for quotes from multiple insurance providers, you’ll be more likely to find a great deal on a car insurance policy. Just enter your ZIP code here to get started:


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Other Factors That Affect Auto Insurance Costs

If you haven’t owned an electric car before, then Tesla insurance costs can be a bit of a surprise, and you may be tempted to choose a different vehicle instead. Still, there are a few factors that impact your insurance costs that have nothing to do with the make and model of the car you drive.

By taking these factors into account, you may be able to lower your insurance premium, even if you still decide to drive home with a Tesla.

Where You Live

Insurance costs vary from state to state, so it’s important to get an accurate quote for the cost of car insurance where you live. States like New York and New Jersey have some of the highest car insurance rates in the country, while the average cost of car insurance coverage in California is a more reasonable $70 per month.

Even if you aren’t planning on moving anytime soon, the location where you park your vehicle — on the street versus a garage — can impact your insurance costs.

Your Driving History

Car insurance companies take your driving record into account when determining your premium. That’s why inexperienced drivers and high-risk drivers always pay more, no matter what kind of car they drive.

You may be able to lower your insurance costs by taking a defensive driving course or enrolling in a safe driver program. Although the Tesla Autopilot won’t fix your driving record on its own, other safety features, like the Tesla Safety score, may help you improve your driving habits and lower your insurance costs over time.

Your Level of Coverage

Finally, the level of insurance coverage you need can have a major impact on your car insurance premiums. If you’re leasing or financing your vehicle, then chances are your lender will require you to maintain full coverage until you pay off your loan.

If you own the vehicle outright, then you may have more options, such as dropping full coverage as the car ages or choosing a policy with a higher deductible.

Buying a Tesla? Take Some Time to Shop Around

Woman using a tablet while charging her car

If you’re thinking of buying a new Tesla, you’re not the only one wondering, Why is Tesla insurance so high? The simplest answer is that it’s an expensive vehicle that maintains its resale value over time, so its insurance costs reflect that price point.

Buying a used Tesla can be a great way to reduce some of those costs — and avoid the lengthy wait times for a new Tesla Model 3.

Ready to get started? Simply enter your ZIP code here to find the best deals on used EVs near you:


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