Tesla owners should pay more for insurance, AAA says | Hacker News Reader

Tesla owners should pay more for insurance, AAA says

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134 pointsmudil141 comments

Actuarial pricing is pretty simple in it's basis. Estimate claim frequency and claim severity (loss) per model, age group, state, [100s more categories]. Use proper statistical distribution. Apply markup for costs. Apply commercial markup or discount when comparing to competition. Repeat yearly.

Since claim size is highly skewed, don't trust the new entrant to have enough data.

Often 5+ yrs of data are used. So a new model / development like Tesla will give you headaches. Usually some leap of faith and pressure from product development will get the early premiums coming in too low, since everyone wants a piece of the pie. I've seen that played out in many markets.

There are lots of interesting things going on in the data, so a proper PHYD-scheme should be able to beat old school pricing rather quickly. But then again, adoption of that is usually in sub-markets that are really different (f.e. young drivers in a direct market are really not what you want dominating your portfolio).

With regards to Tesla's reply. AAA will be modelling on an individual brand basis. They are just using the data as a outside source comparison. The Volvo comparison is not really important. Perhaps in the group F1-cars for regular people they wouldn't stand out, but that doesn't change the equation for AAA. Even with low N, if all the simple claims come in 1000s $ higher, you don't need to be able estimate the entire distribution to expect a loss leading proposition.

Why don't companies price new models to the market relatively high instead of low? That seems like they're leaving a lot of money on the table. And I can't see why an actuary would care about pressure from product. Do you mean from the car manufacturer, or some internal insurance product team?

Even if it's internal product pressure, I don't see why any insurance company would do anything but give the actuaries a massive amount of say. That's the core competency of insurance companies.

Internal pressure probably. Not all insurance products are profitable. Especially big insurers are willing to take a hit to get in "good" customers, for example rich Tesla drivers. Then cross sell other products and raise the price of the original insurance yearly.

Why would a rich tesla driver be a better customer? What if they make a bunch of claims? Insurance is about having predictable data. In this case it looks like Tesla drivers are making too many claims so they need to make premiums higher.

I can answer that. I am not rich, and when the company that insured my car raised it rates a lot I went looking elsewhere.

The new company got my car insurance, and when my truck insurance was due they got that too. Later that year I added my house insurance and since I was getting discounts I also added my cabin up at Parry Sound.

So the result of having a cheaper car insurance is they sold me four policy not just one.

More likely to purchase other profitable lines. Sell them an inexpensive auto insurance policy, then make more money on Homeowners, Liability, Umbrella, Boat, Jewelery, Life, etc.

This is the answer. Homeowner's is the big profit maker for those companies which sell both. Presumably a Tesla owner has an expensive home. Auto is just for breaking even.

While not rich and not a tesla driver. I'd speculate richer folks tend to not micromanage prices changes(raises) in insurance premiums. Someone who is less rich might reconsider insurance purely on a financial decision. And someone a little more wealthy will never look twice at it.

Most people don't get in accidents and most people need auto insurance for many decades. So those lazy rich people will likely not change.

This is also assuming most people don't make many claims in insurance. (as is the base concept of how insurance works?)

Yeah, I don't usually cross shop renewals. I just renew whatever I have, unless the premium increase is considerable (+15-20%).

I might be leaving a lot of money on the table, and I'm not even that wealthy, but it's just not worth it to me.

And I'd add that the few times I've made relatively minor claims on both my home and auto insurance (handled by the same company), it's been pretty much completely painless. It's just not worth it for me to go to a bargain basement insurer to save maybe a few hundred bucks a year.

I can only guess - after you cross 25 years of age, I have never heard of insurance going down. I know people who are 50-60 years old, with zero claims ever, and they never get a discount, the annual renewal always come back higher. So what they do? They move every year. Every single year, they go through the effort of calling few insurers to get marginally better price to avoid the inevitable hike.

I can only guess that if you are rich then you don't care - it's more likely you will stay with the same insurer because it's not worth your time to be looking elsewhere.

Richer insurees have more assets to go after if they are involved in a the 2-sigma events (eg killed someone while drunk driving; insurance can come after a wealthy person's assets).

It wouldn't be shocking that tesla drivers are expected to make fewer claims, based on the halo bias towards wealthy people.

But if you are the insurance of the Tesla driver, it's the other party (through insurance or directly) that will come after your driver, not you. You will just say to your driver "per our contract, I cover up to $X, and the rest, you will have to deal on your own". You're not responsible for getting that money out of him, if I'm not mistaken.

Perhaps it's because you need data to arrive at the correct pricing and if you price too high, you won't get that data. It may make sense to lose a little bit initially during the data gathering stage to more quickly arrive at an accurate pricing model than to overestimate and allow your competition to gather all the data.

It's probably not that difficult to create a model that will adjust the prices to reclaim the loss later. Starting low likely generates more sales overall.

Another possible consideration, if the average cost of repair is higher (assuming for the sake of the argument that all Tesla's drivers involved in accidents were not at fault) the insurance companies will need (ahem, cough, cough) to raise the costs of all other contracts to compensate.

This of course is not limited to Tesla's, wherever there are more "luxury" cars driven it is more likely that insurance claims will be higher and the insurance companies are likely to spread the delta on all contracts.

Doesn't insurance segment by model? Or are you saying that 10% of a $10k tesla repair is $1k in overhead, and that gets amortized across the customer base?

No, the argument is that when a Tesla is not at fault then some other insurance company is paying more money to fix a Tesla than say a similar BMW.

Exactly.

Imagine that there exists only one insurance company (additionally non-profit) and that only 100 cars - all in the same, single segment - exist, that have (invariably) 10 collisions with another car per year.

If the average cost for repairs is US$ 10,000, for the system to work the total amount of rates must be 10x10,000=100,000 and thus each car owner will pay 100,000/100= 1,000 US$.

Now introduce a new car that replaces a large part, let's say 50% of the (only) segment.

When these new cars are involved in an accident, (and their driver is not at fault) the repair costs double to 20,000 US$, so if on average you will have 5 accidents costing 10,000 as before and 5 costing 20,000, the total costs will raise to 150,000.

The insurance company will either leave the 50 "normal" cars at 1,000 and thus raise the rates of the 50 "more expensive" cars to 2,000 OR spread the difference by raising everyone's rates to 1,500.

Tesla's response is pretty non-sensical. Tesla basically says the vehicles they're being compared to aren't real competitors, and that their cars are very safe. Both of those things may be true, but it doesn't respond to the institutes' point:

"In the large luxury SUV class, where collision coverage claim frequency is the same as the average for all vehicles and the cost of claims is 43 percent above average, the owners of the Model X file for claims 41 percent more often than average, and those claims cost 89 percent more than average, according to the institute."

Also "the rear-wheel-drive Tesla Model S is involved in 46 percent more claims than average, and those claims cost more than twice than average."

The big problem seems to be cost of repair. Tesla owners have complained about the high cost and poor availability of body parts.[1][2]

(I miss the 5mph bumper standard. For a few years in the 1980s, US cars were required to have bumpers that could withstand a 5mph collision with no damage. I have a Ford Bronco which complies with that. It was once rear-ended by a SamTrans van. The van's nose and front end collapsed, as it should, for crush depth. Damage to the Bronco was a bent bracket for the trailer power connector.)

[1] https://electrek.co/2017/03/09/tesla-parts-repairs-lead/ [2] http://jalopnik.com/teslas-potential-body-shop-backlog-night...

I'm curious as to why Teslas are involved in 46% more claims than average. Are the cars shopping cart magnets or something? Are they falling apart? Do Tesla owners get into more accidents than non-Tesla owners? Or do they just file claims for every little scratch and paint chip?

Maybe one the reasons A lot of owners have said that the car being wider and longer than most of the cars, they initially had a hard time at corners, parking and other places where intuition is needed.

I think for the reasons cited by the parent comment: the cost of repairs are higher than for other vehicles, so the incentive to file a claim is greater for a broader set of collision events.

Let's say they are involved in exactly the same number of collisions and the same severity distribution. If the costs for repair are higher across the board, claims are more likely for repairs that would have otherwise been paid out of pocket by owners of other vehicles.

If my 10-year old car is involved in a minor collision and the estimated cost of repair is $250, I am just going to pay for it and not bother with an insurance claim. If instead I owned a car that was more costly to repair, and the repair estimate for my collision were $2,500, I might decide to file a claim.

I'd wager most people with a 10-year old car facing a $250 cosmetic repair would opt to "do nothing".

This is only true if the repair is cosmetic. The nice thing about 10-20 year old cars is that anything that doesn't wear out is cheap and easy to find from a wrecker. I recently hit a deer and bought a hood, headlight & grill for $200.

One plausible explanation would be if Teslas logged more miles than comparable cars. If I drove more, I'd be more inclined to spend money up front for a more fuel efficient (and more fun to drive) car. And on the flip side, if I drove a gas-guzzling luxury SUV, I might not put as many miles on it.

I have no data to support this, and I'm not an actuary, but Teslas driving more miles than luxury SUV's and claims being proportional to miles driven seem like a plausible hypothesis.

I think any group whose vehicle purchase decisions are colored by gas prices are not the same group buying Tesla's or luxury SUVs. I would expect the overlap to be very small at least. My guess is Tesla drivers put fewer miles on them than average.

If that was true, then Mercedes and BMW wouldn't sell any diesel S-class or 7-series cars, and yet they do(and they are majority of sales of these models in EU) - people want luxury and great fuel economy at the same time.

I think there are people like that commuting from SF to Mountain View, or such long distances. I don't believe that they are a majority, though.

I can corroborate this explanation. We're a two vehicle household - a model S and a hybrid SUV, and all long-haul trips are done on Tesla.

For one, the supercharging is free and is usually near restrooms/Starbucks/amenities that we would've stopped by anyways. For two, Tesla's barren interior and generous trunk provides quite a bit of storage for random things you have to haul when traveling with kids. For three, the autopilot takes out a lot of stress and makes road trips almost pleasurable.

I could think of few:

- better acceleration than other cars (this a bit encourages people tho show it off)

- autopilot which is still in beta, it works most of the time, which is a bit dangerous because people get used to it and reduce their attention, which is dangerous when it fails[1]

- autoparking similar as autopilot, it works but once in a while can make a mistake

The repairs are also expensive, my friend recently purchased model S and when he was parking he judged distance poorly and went too far hitting a parked truck in front of him and slightly bending his bumper on the side. The repair apparently will cost $3,500. I'm guessing they want to replace whole bumper, but it still way more expensive that bumper replacement in other cars.

[1] For example: https://www.reddit.com/r/teslamotors/comments/6egn1z/2_days_...

combined with:

- people not familiar with how rear wheel drive cars are different from front wheel drive cars.

- people not familiar with how a vehicle that has a near 50/50 spread of weight between the front and rear axle is different from a more standard vehicle.

> "In a front wheel drive car, you understeer, crash into a tree and you die. In a rear-wheel drive car, you oversteer, spin around, crash into a tree and you die. In the rear-wheel drive car, you don't see the tree that kills you."

But if what you say is true, Mercedes, BMW, Audi etc. should be in the same boat, and TFA indicates they're not.

At least in North America, I'll wager the majority of new MB (4matic), BMW (Xdrive), and especially Audi (Quattro) vehicles are not rear-wheel drive.

Most of the Audis nevertheless understeer, though...

The above quote is precisely why powerful RWD vehicles are designed with mild understeer and more weight at the front. Put them in the hands of a novice and (a) they're more likely to hit things head-on, where airbags and crumple zones can protect the occupants, than side on, and (b) when they do start to oversteer it's more predictable and manageable.

Maybe car licenses should have type ratings like airplane licenses -- to drive/insure a specific class of vehicle, one ought to have training in that type of vehicle with an instructor. One can't have a commercial pilot license and start flying turbine aircraft without being checked out/endorsed for the specific aircraft type.

Type endorsements make sense to me: SUVs over a certain weight, vans, high performance cars -- they all have vastly different drive characteristics and thus a "normal" driver experienced with a Ford Focus can't necessary be guaranteed to have the same competence with a high performance car just because they have a driver's license.

Perhaps insurance companies could intoduce a voluntary type rating system to provide discounts for those "checked out" in specific vehicle types. It would make the roads safer and insurance cheaper.

>One can't have a commercial pilot license and start flying turbine aircraft without being checked out/endorsed for the specific aircraft type.

For turboprops, you mostly can (up to 12500# MTOW). With my Airplane-Single Engine, Land rating and complex endorsement, I can hop out of a Bonanza and into a TBM with no further FAA-required training or checkout. With my Airplane-Multiengine, Land rating, I can hop out of a Beech 58P and into a King Air (up through the BE20) with no further FAA involvement.

Turbofans/turbojets do require a specific type rating.

There are very few bodyshops and repair facilities, and Tesla makes it impossible to get manuals, tools and parts. My neighbor needed to get his car towed 100 miles for car/deer mishap.

So it's both expensive and a hassle to deal with minor repairs, so people file claims. Even with a BMW or Mercedes, you don't have those sorts of challenges. Hell, some insurers even maintain their own service centers.

>>(I miss the 5mph bumper standard. For a few years in the 1980s, US cars were required to have bumpers that could withstand a 5mph collision with no damage. I have a Ford Bronco which complies with that. It was once rear-ended by a SamTrans van. The van's nose and front end collapsed, as it should, for crush depth. Damage to the Bronco was a bent bracket for the trailer power connector.)

The problem with older cars is that in a crash at a higher speed(even 30mph) you might be left with a fully functional bronco and a dead driver, while the van(or any newer car) is absolutely destroyed but the driver doesn't have a scratch.

I mean I guess we could make cars that are still safe in collisions but which can survive minor fender benders without much damage, but I don't have enough data on this.

The big plastic bumpers on the Ford Ka were designed to survive city driving as well as comply with the law for motorway speed requirements of safety. The original version of the a had the same bumpers in the same black plastic regardless of the car colour. However, the version 2 Ka had colour coded bumpers, as if this 'easy to park' headline feature mattered not. The updated bumpers will show scratches whereas the black bumpers were visually more forgiving of damage.

So 'bumpers that you can hit things with' failed the market test (as did bull bars).

They are very common in Europe, where parking is often very challenging. Watching people shunt their way out of spot in Rome, with no damage done, is entertaining for the first time tourist.

I had a minor collision with an original Ford Ka after I switched lanes without looking. My car had no damage at all, but the Ka hat a bit of red paint on the black plastic bumper. It had to be replaced, since the owner didn't care how "forgiving of damage" it was, they wanted a car without scratches.

They're still pretty flexible plastic: I have one as my daily driver. The market test was failed because plain ABS faded to an ugly grey. Meanwhile the Citroen Cactus is sporting big squishies all over.

Sensor and ADAS technology integrated directly into the body of these newer vehicles increases repair cost substantially.

In Tesla's case I think it's more they can't make the spares, or are having trouble training shops to handle bodywork and the like. You see nightmare stories on the various Tesla forums of owners who have gone months without a car, just because there aren't parts available (months during which insurance must cover a rental, thus raising the repair cost even more).

Many years ago, I had an old Saab V4, the one with a two stroke engine, from somewhere in the sixties. The thing finally died, and as there was a scrapyard very close to my place of work, a colleague and I decided to push it over there by hand one lunchbreak.

Enter a pair of other colleagues, in the company's brand new Dodge van, probably a 1980 model. "Ha ha, we'll give you a push", which they promptly did. A very, very gentle nudge, walking pace.

On the Saab, nothing. On the Dodge, two nasty dents from rear fender extrusions.

More Tesla PR. It reminds me of Musk's post on the autopilot after those crashes: 'Tesla drivers have fewer accidents than the average American driver!' Yeah, that's great, but that's not the question that was being asked, now was it?

As much as I agree with you, it's clearly working for the overall public as most of the world still has a love affair with Tesla (just look at their stock price).

What was the question bring asked?

"why do you have a feature that cannot see an obstacle in the middle of the road called autopilot?"

Answering this with "it crashes less than your average driver!" is not an answer to that question, despite being true. If a Boeing plane crashes on autopilot, Boeing cannot dismiss questions about safety of the system by saying "hey, our planes on autopilot crash less than manually controlled planes!", even though that is true.

I don't think anyone was asking "What is the purpose in having a bug in your autopilot?"

I think people were asking "Is your autopilot actually dependable/safe?"

And that latter question is what Musk was responding to.

He didn't really answer about autopilot. He said that Tesla are safer cars (due to reasons not related to being autopilot).

I test drove an HW2 autopilot Tesla a few months ago. It tried to crash about every hundred feet. It wouldn't have killed me, but it certainly would have caused quite a few thousand dollars of damage.

Supposedly it works better now.

The question being asked is, 'are Tesla drivers less safe using the Autopilot than the same drivers would be without the Autopilot?' The question being answered is, 'are Tesla drivers safer than non-Tesla drivers?'

If you're referring to https://www.tesla.com/blog/tragic-loss, that doesn't even claim "Tesla drivers have fewer accidents than the average American driver"; all it claims is that it has fewer fatalities.

That isn't surprising, given that larger and newer cars tend to be safer, and that the average American driver was driving a smaller and older car than the average Tesla driver (possibly on average on worse roads, too, but I'm not sure about that)

This is the standard PR response of Musk whenever criticized.

I don't get why you'd compare to other cars at all. Take the average payout per month for this model, divide by the number of cars of this model that you insure, add some overhead, and that should be your average premium, shouldn't it?

If the model is brand new and you don't have enough data to do that then I could understand finding something comparable to make a guess at costs, but I'd think Teslas have been around long enough now that this is no longer needed.

> I don't get why you'd compare to other cars at all.

Because it's good marketing. Not only are Tesla putting forward a counter argument (albeit one that's easily dismissed by most of us on here) but they're also promoting the exclusivity of their brand in the process.

It's like in job interviews where you spin your negatives into positives rather than admitting you might have poor organisation skills or spend too much time on HN.

That explains why Tesla is doing it, but what about AAA?

Ahh I get your point now. Apologies

No problem. You weren't wrong!

They're trying to explain why they want to charge higher premiums for X vs. Y. They can either explain their entire business model for X in isolation, including assumed profit margins, investment yields, or simply point out that X is worse by such and such a margin than Y and hence will cost so much more than Y.

Oh, and they do NOT want to explain their business model because it has lots of shady bits. E.g. all insurance businesses involve authorized providers who bill fictional rates and then accept discounted payments the customer doesn't see. (How can replacing a $50 moulded part cost $2000? Why does spending 15 minutes with a $200,000 ultrasound machine cost $4000?)

As a Tesla owner I found anecdotal evidence of one of the core ideas here: Tesla's just cost more to repair. My wife had some guy back in to the front of our car - she was completely stopped at the time. Parking lot collision and the other guy just wasn't paying attention, "crash" speed was probably < 4MPH. It ended up costing him $13K, although clearly his fault I felt bad for the guy. He managed to crush the instrumentation cluster in the nose and warp the hood and front end (remember, aluminum). Also the redonkulous torque and speed are abound to get some people in trouble, as fun as they are.

Did you have to take the Tesla to a certified repair shop? If so, that is going to push the insurance rates up when the insurance company cannot use their own favorite body shops.

Yes, because of the unusual materials etc. Regular shop wouldn't have been able to do if they wanted to (and Tesla is picky about verifying shops). To be clear it was easy to find a certified shop, and the entire experience felt well cared for by Tesla as is their rep. But it was a ton of cost (to him) for what amounted to a fender bender.

Wow, I get that a Tesla costs more than the median yearly income in the US, but $13k for a sub-10mph crash seems excessive. Repairs for a similarly priced BMW or Volvo would likely be less, knowing a few people involved in accidents with expensive vehicles like those.

Meanwhile, I'm gonna stick to buying used for less than the cost of your accident :P

> I'm gonna stick to buying used for less than the cost of your accident

The cost here wasn't to the Tesla driver, but to one of the people sharing the road with them without any say in the matter. :)

Part of the cost of an expensive to repair car is an externality on all the other drivers.

Sure, but you end up paying for this directly in the form of insurance increases like this. Additionally, your taking on a large liability, if the car gets damaged in this way and the person who damaged it drives off, or worse yet damaged it without the interaction of another car, you are left footing the bill or reporting it to your insurance (which is another gamble).

I seems like this has the makings of the same racket as healthcare. Eventually, if all car makers start doing the same thing, everyone will end up with highly inflated insurance rates.

...or, the market will reject Tesla, as they will attract even higher costs than average.

It's not so much about Tesla. Tesla is following the same trajectory that a lot of other consumer electronics have. i.e., You go from the PC model to the smartphone SoC model. You do everything in house, cut out dealers, get rid of interoperabilty and throw in some DRM/obfuscation if people try to make aftermarket parts or repair them. Add to that the fact that the govt. will anyway exert more regulatory control with all things autonomous. You end up with a segment that is heavily regulated, with little choice for end-users. Much like healthcare or telecom.

Exactly.

That's pretty clearly a consumer hostile position. Given the extreme competition in the automotive sector and the nation-state interest in their continued success, I'm a long term bear on Tesla.

"It ended up costing him $13K, although clearly his fault I felt bad for the guy."

Wouldn't his liability insurance have paid for damage to another vehicle? I'd expect that the only cost to the driver might be an increase on his insurance premium for having been at fault in a collision.

A $13k claim would make that increase in premium quite significant, though, for a <4 mph ding that would normally be settled by both parties without any insurance involvement.

For comparison, the average "newer used" (1-3 years old) car in 2017 sold for $15374, so a low speed car park ding cost almost as much as destroying a nearly-new car.

1: http://www.mlive.com/business/index.ssf/2016/12/5_things_to_...

In New York, the state minimum is $10k for property damage. Good luck suing the guy carrying that low level of coverage!

I miss steel bodywork. This kind of "collision" in a 1980s vehicle would require a little hammering to pop out the resulting dent, and a little touch-up paint. Modern cars, it seems like you breathe on them, and they shatter and you're replacing entire quarter-panels or front-end assemblies.

Somebody backed into the front corner of my pickup truck at about 2 mph. Put a little crack into the plastic bumper, that continues into the front quarter panel. I'm glad I don't care about my vehicles looking 100% perfect, as I've no doubt that it'd be in the shop for a week, torn completely apart, and would cost a couple grand. It's ridiculous.

I think this is actually the automation hardware being expensive. If you smack into a car with a normal bumper, everything might be fine, but if its full of radars and lidars, fender benders will be pricey.

I like not getting injured or killed because of crumple zones.

The thing is, modern vehicles are a lot safer, in part because of that crumpling.

https://m.youtube.com/watch?v=joMK1WZjP7g

As I mentioned elsewhere - if you get in an accident in an old car, you end up with a barely damaged car and a dead driver. In a new car, you end up with destroyed car and a driver without a scratch. I don't mean to be overdramatic, but I would rather have every single part in the front of my car to crumple and turn into dust in a low-speed accident, than get impaled on the steering column just because the frame of the car won't crumple under impact.

the less it crumples, the more you do

I mean, there has to be a happy medium. 5mph collisions won't kill or even injure anyone in any car. There's no reason for a car to take any damage at that speed. But yeah, 35+? Crumple away.

It just seems like it shouldn't have to be either/or. Is material science not advanced enough to find some combination of parts that can sustain a low speed impact with no damage but crumple safely in a higher-speed impact?

> Is material science not advanced enough to find some combination of parts that can sustain a low speed impact with no damage but crumple safely in a higher-speed impact?

For collisions, it's safe for the cabin to be fairly rigid to protect the occupants while crumpling the zones further away to absorb as much of the energy as possible before the impact reaches the soft, mushy humans.

It's a combination of physics and costs. Material science might be advanced enough, but the solution might not make economic sense; but if anyone has it, it would likely be Volvo.

It sounds like the main issue here is repair cost. The cost of repairs is about twice as much, which could at least partially explain why there's also around 50% more claims.

Most people only report incidents to insurance if the damage exceeds the cost of their deductable. If repairs to Teslas cost twice as much that could push a non-trivial amount of repairs over that threshold.

Elon should make repair parts and shop training a higher priority. One of the only advantages of the dealership model is having a large force of mechanics very familiar with your vehicles. Perhaps Tesla should partner with some shops or build their own in locations with Tesla offices.

I kinda agree that the Model S certainly isn't bought for the same reasons as a luxury SUV. It's kinda funny that they're not comparing one of the fastest cars in the world against other supercars. Sound like someone at AAA has stock in Ferrari or something :).

The Model S may have a fast 0-60 time but it is no supercar. It can't even do one lap of the Nurburgring without entering limp mode.

True, though I imagine a lot of crashes can occur from just that 0-60. There are lots of Internet videos that attest to this.

Oh I agree. It still has far more performance than anyone really "needs" and you can totally wrap yourself around a tree with that.

My Mazda 3 does 0-60 in about 7 seconds which would have been hot hatch territory a few decades ago. That's plenty for most people even for highway driving.

The Model S has a weird performance profile. Most other cars that have similar acceleration also have the handling to accompany it.

Sure, but if you do the equivalent of even 25% of a record laptop on the Nurburgring on a public road you should be jailed.

> Collision damage claims for large luxury vehicles are reported 13 percent more frequently than average, and those claims cost about 50 percent higher than average, the Highway Loss Data Institute said. The rear-wheel-drive Tesla Model S is involved in 46 percent more claims than average, and those claims cost more than twice than average, it said.

Go with the data then. Perhaps luxury car owners are more likely to make a claim from even a minor scratch? And since they are "luxury cars" there is more of a premium on repairs? Just throwing out guesses, but as I say they have the data and should charge as appropriate.

> Tesla said the high rate of acceleration in both the Model S and Model X make it "false and misleading" to compare against vehicles such as the XC70

That's a bullshit response from Tesla, roughly equivalent to 'our cars are special snowflakes and should not be compared to other cars (but only when it makes us look bad)' - I see zero reason to believe that faster acceleration means fewer claims and would love to see their evidence that contradicts what this article states.

Their owners are filing more claims and more expensive claims. The way insurance works is those people pay a higher rate (or insurance loses money on them).

> I see zero reason to believe that faster acceleration means fewer claims

I think what they mean is that the fast acceleration puts the Tesla cars in the "luxury" bracket, but really they should be in a regular bracket.

I think Tesla is arguing the opposite? AAA is comparing the cost of repairs of Tesla's do cars that cost less than half as much. Tesla is saying their costs should be compared to other cars of comparable value (other high end luxury vehicles).

I didn't notice anything about the types of claims. The acceleration could contribute to rear end collisions if someone stops quickly after accelerating, i.e. pulling into traffic, and the person behind not reacting quickly enough. Almost all of my "accidents" have been this on the receiving end, but minus the crazy acceleration.

>> That's a bullshit response from Tesla

It's a Chewbacca Defense. At the end of the day the evidence shows Tesla owners should pay more due to the frequency and cost of claims, thus higher rates. Squabbling about whether Telsa vehicles should be compared to luxury SUVs, Bentleys, Lamborghinis or whatever just muddies the water. AAA put the comparison out there so they have only themselves to blame for providing the ammo, but that doesn't actually salvage Tesla's (non-)argument.

I drove a Leaf for a while and one issue fellow owners faced was that regen braking plus one-pedal driving meant the car could slow down very quickly without people expecting it. The Model S/X do put on the brake lights when this happens, unlike the Leaf, but I'm curious if they get rear-ended more often than other vehicles.

I own a Model S and I know that one of the painful parts of ownership is that you have to go to approved bodyshops and Tesla service centers, as well as use only Tesla original parts.

That translates into very long wait times to fix your car (they haven't scaled those yet, and they are exclusive, so it's a bottleneck), and higher costs. Not to mention that parts aren't available that quickly since they have a limited production rate and have to decide what % are used for repairs vs producing new cars, and guess who impacts the bottomline the most? Then higher costs of repair translates to higher premiums.

BTW I'm not complaining that the repair/service centers do a bad job - I've generally had a good experience with them - but their scarcity and exclusivity is an issue.

It can turn a minor fender bender into months-long waiting game without your car (it's "at the bodyshop waiting for parts").

This makes me wonder how slow service will get once a large volume of Model 3's are on the road.

I guess it all depends how much they invest in scaling that part of the business. It's a bit of an optimization problem to figure out the "right" formula to grow the business.

I can already feel the pinch at the supercharger stations. It's ridiculous to have to wait for a spot to open. I wish the charging stations were designed with 2 "pumps", so you can plug in next to someone, even if no current flows to your car, and you get energized as soon as the other guy leaves. Also, with a double feeder, it's easier for one party to share the input power with someone else: sometimes I don't want the charge to go too fast (when I'm at a restaurant inside a mall for example, and have to rush out in the middle of the main course to free up the space). I wish I could simply say: "ok, let my ETA be 1:45pm" and have the system dial everything such that another car can charge while preserving my ETA.

I have no idea what on earth Tesla is trying to argue here.

"Among other things, it compares Model S and X to cars that are not remotely peers, including even a Volvo station wagon"

Okay? I don't see how any of that is relevant. Insurance prices should be based on risk, and risk is probability times severity.

They're arguing the insurance costs will always be more for higher end cars, so comparing the cost of repair to a much cheaper car makes no sense.

If there is a car 1/10th the cost of a Tesla but the Tesla is 3x as safe, you would still expect the Tesla's insurance to be more.

I know a few people with Teslas. One got a fist-sized dent in the back door and it cost $6000. Another got into a fender bender and it cost $30,000 to fix. Im surprised insurance isn't higher already.

It needs to be considered within the bracket of car you're dealing with. Insurance will always be higher for higher end cars. I imagine putting a dent in a Rolls Royce is not a cheap matter either.

The big costs in insurance though I think are medical bills, which could run well above the total cost of the car. In this respect, Tesla's should be much cheaper to insure then say a Bugatti.

What is the safety record of a Bugatti?

It already is. Tesla is arguing that the Model S shouldn't be compared to cars like the 38k XC70 because it is in a higher (more expensive) class, which is what AAA is doing.

That seems to be a common experience.[1] Dent repair on aluminum is difficult. The Tesla Model 3 is said to be mostly steel. That's common as production volume increases; aluminum or Fiberglas is cheaper in low volume, but if you're making enough cars to justify the huge stamping dies and presses required, steel is cheaper.

[1] http://www.greencarreports.com/news/1096220_tesla-model-s-al...

There are only a handful of shops around where I live that will even touch a Tesla when it comes to body work. Aluminum is hard to work with. OTOH someone who has paid $100k for a car should be able to fork over $300 more a year.

Could Tesla just create an insurance company and offer their own insurance for Tesla cars? They could probably offer a better rate than other companies.

In the helicopter world, I think this is what Frank Robinson did - created Pathfinder insurance that offered the cheapest insurance for Robinson helicopters. Their web page claims it is independent from Robinson Helicopters, but I think there is a common owner somewhere up the chain. http://pathfinderindemnity.com/index.php?option=com_content&...

how would that work. if the crash is my fault then my insurance is paying for the repair and not yours. so it does not mather if you have tesla insurance.

or are we talking about casco insurance (that repairs your car if its your fault ? )

i pay my insurance based on my age, power of the car, past accidents and the city i live.

is it different in usa ?

Now consider the case that you own the Tesla.

Simple solution -- if Tesla thinks this is price gouging, why not get into the insurance business. If they can go to mars, they should be able to underwrite the cost of replacing Tesla body panels, haha.

In Europe we have two types of insurance:

Compulsory liability insurance - this one pays out for damages and injuries to the victim of a collision you caused.

Comprehensive insurance - covers everything even if you are the cause of accident.

>the owners of the Model X file for claims 41 percent more often than average,

What exactly does that mean? Did they cause the accident, or did someone else rear ended their Tesla? This smells like victim blaming.

Generally, in the US, we have the same. The catch is, that if you are leasing or have a car loan on your vehicle, you are usually required by the financing company to carry comprehensive coverage - so that if you total the vehicle while the loan is active, you don't get caught with having to buy another vehicle, and still pay the loan for the wrecked vehicle off.

Thus, while you can carry just liability insurance on your vehicle in most states, it isn't all that common, aside from older, paid-off vehicles, or used clunkers that are cheap enough for people to buy outright without financing.

If you had a deductible of $1000 and bump your fender on something in a ford focus, it won't be worth filing a claim. You do it in a Tesla and it might run several thousand and make filing a claim necessary.

When I hit a deer with my 2003 Pontiac, I lost the bumper, radiator, quarter panel, hood, mirror and had a hoof scratch running down the length of the car. Total cost: $6k in 2007.

From what I hear, bumper replacement alone can top $10k on a Model S.

Sure, but that means you are talking voluntary self insurance, not the compulsory third party liability one.

To me, European, statement "AAA claims Tesla owners should pay more" means they want to bump price of compulsory insurance for Tesla owners - insurance that covers damage done to other cars, not the expensive Teslas. No one is stopping you from charging more for voluntary coverage.

If you read further down, they clarify that they are talking about collision (i.e. The driver was at fault and banged into something) and comprehensive ("act of god") claims.

Those are rate lines independent of liability.

Why do you think they are more likely to be rear-ended than any other car on the road?

One thing that is likely is that if minor repairs cost an arm and a leg, Tesla owners will file claims for things that owners of other cars wouldn't file claims for because filing a claim raises your premiums. Probability of filing a claim !== probability of having an accident, but it is what determines how expensive the car is to insure.

Hypothesis: Aluminum Body and frame cars are still in the minority and require more careful/specialized/costlier repairs.

All new Teslas have the 12 sets of fancy sensors (cameras and ultrasonic) sprinkled around the car, complete with mounts and cabling. The car is also fairly well optimized for minimum air resistance to maximize range per watt. The complications mean that your average body shop can't do it and/or doesn't have access to the parts. So you get higher prices, which of course results in more claims because more of the repairs are well above the deductible.

>Other large insurance companies, including State Farm and Geico, said that claims data is a major factor in calculating premiums, but would not disclose if their Tesla-owning customers would also see rates rise.

Ruh-roh!

Tesla owners in fact already pay less insurance because of agreements the company has made with certain insurers. The reason they are able to make such agreements is that the cars are objectively safer.

If they were objectively safer, all insurers would have lower rates for them based on the actuarial data.

"Agreements with certain insurers" is a commercial, promotional consideration, and has precisely zero correlation with your claim that it shows they are "objectively safer".

While commercial and promotional consideration's definitely come into play if the insurers were losing money I highly doubt they would be doing it, so to say there's zero correlation seems strong/wrong to me.

Tesla's are objectively safer according to measurements by NHTSA but that doesn't necessarily mean that all insurers would charge less. For one there is a long time delay in building an accurate insurance model. Also, insurers are not altruistic, they will price at whatever the market will bear so until it becomes very clear that Tesla's cost less or all of the competition starts to do it, you won't see prices come down.

> I highly doubt they would be doing it,

Unless the said "agreement" involved Tesla slipping them money. Essentially you paid for your insurance upfront to Tesla.

Yes, Tesla are safer. But this doesn't mean 1) Tesla have less accidents 2) Tesla repairs are cheaper

The cost of comprehensive/collision coverage has nothing to do with safety. Bodily injury insurance sure, that's lower if the car is safer but comprehensive/collision premiums have nothing to do with safety.

"Safer" isn't the same as "cheaper to insure". This is the major flaw in their PR response.

Makes sense for a $100,000+ Ferrari... I mean Tesla.

Hypothesis: this is coming from insurers whose pricing isn't mileage-based, and Teslas are getting more miles per month than other cars in the same class.

Is the entire industry so dumb they overlooked such an obvious parameter?

I mean it's possible, but back your claim up with something

Is this a preemptive strike? Autonomous cars will kill insurance company profits.

Just like 99% autonomous ships have killed shipping insurance company profits, and how 95% autonomous airplanes have killed air insurance company profits?

Air insurance profitability is down, in part due to technology innovation. http://www.theactuary.com/features/2015/09/on-a-wing-and-a-p...

Because less maintenance? I don't see the logic here. Does AAA have something to gain by requiring anyone to pay more insurance?

They have a major auto insurance operation.

Because "Model S and Model X had abnormally high claim frequencies and high costs of insurance claims compared with other cars in the same classes."

AAA is the insurer — they obviously directly gain from increasing premiums (all else being equal) and lose when premiums are lower than the insured risk.

Auto insurance is fiercely competitive, and margins are relatively low, and companies spend a lot of money on overhead and cost of customer acquisition, so AAA has a lot to lose by unilaterally raising rates.

Not really, Tesla drivers will just flock to other insurers who don't rate their cars appropriately.

Insurance is regulated, competitive and low margin.

Insurers don't pay for maintenance. They pay for collision repair and medical.

And data say those are more.

No real surprise here. Expensive luxury/sports cars.

> Does AAA have something to gain by requiring anyone to pay more insurance?

If their premiums are too low, they will lose money when insuring Tesla owners. According to AAA, their data shows that their premiums on Teslas were set too low, and need to be raised.

If costs to insure Tesla are not, in fact, higher, then other insurers could keep their prices lower. It will be interesting to see if other insurers follow suit.

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