Can Tesla Insurance Help Increase Driver Safety?

Tesla has begun rolling out its insurance plans in a handful of U.S. states over the past few years, as yet another part of the company’s growing ecosystem. Although still in its infancy, Tesla Insurance can be crucial in keeping prices low and driver safety high, as described by a few of the automaker’s executives in recent months.

Tesla Safety Score Tesla Insurance

Tesla CEO Elon Musk weighed in on the carmaker’s new insurance plans in a recent All-In Podcast last month, as reported by Bloomberg. In the conversation, Musk talked about the use of real-time driving data to determine safety results – a move that both lowers Tesla’s prices relative to typical insurance prices and encourages drivers to drive more safely.

The safety score in question is measured using five criteria: Forward collision warnings per. 1,000 miles, hard braking, aggressive turning, unsafe following and forced disengagement of the autopilot. User safety score starts at 90 out of 100, and goes either up or down based on the driver’s behavior. This model also excludes factors used by traditional car insurance companies, such as age and credit rating.

Part of the benefit of Tesla’s insurance model is how it simplifies the process of determining prices, as distilled from the safety result, which can be measured based on real-time driving. As explained by Musk in a recent interview with All-In, the current car insurance system by comparison is not very effective.

“The auto insurance industry is incredibly inefficient,” Musk said at the recent All-In Summit Miami event, where he participated through an online livestream. “You have so many intermediate units, from insurance agents all the way to the final reinsurance, that’s like half a dozen companies, each taking a cut.”

Currently, Tesla’s insurance services are only available in Arizona, Colorado, Illinois, Ohio, Oregon, Texas, and Virginia, in addition to California, where the automaker does not use real-time driving behavior.

When Tesla’s CFO Zachary Kirkhorn entered Texas – internally considered the passionate motivator for the insurance project – he says the automaker’s insurance company had immediately become the second largest insurance company in the state. While Tesla currently only offers its insurance services in eight states, coverage is expected to reach at least 80 percent of the United States before expanding internationally.

Only time will tell how Tesla’s insurance plans will really affect driver safety, especially as they expand to much of the rest of the United States. But the incentive for policyholders to drive well at lower prices seems impenetrable, and with drivers already accustomed to using the Tesla mobile app and the entire enterprise ecosystem, it is likely to be heavily leveraged by new customers in the coming years.

Originally published on EVANNEX. by Zachary Visconti


 

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