Geico terminating insurance coverage of Tesla Cybertrucks

Jalopnik got a statement from GEICO that stated a bit more. https://jalopnik.com/geico-is-cancelling-tesla-cybertruck-po...

"Because of its gross weight and potential challenges with parts availability for repair shops, some customers may have received notices stating that PPA [private passenger automobile] insurance would not be renewed for this vehicle. However, policies for this vehicle have always been available through our commercial insurance division, and now remain available via PPA as well."

I know my insurer (Progressive) is very iffy on Teslas, however there are 20+ year "Lifetime Crown" customers that have some level of overridability on underwriting. After 20+ years they'll even insure you "regardless of changes to your driving status", and I've heard at least one report of someone managing to put a personally owned firetruck on a Progressive policy against underwriting guidelines and Progressive was forced to underwrite it because of the Crown promises to the customer.

If you're leasing your Cybertruck, or have financed its purchase, you will be required to carry full coverage. I would imagine this is the case for most people; very few are paying cash for an $80-100K vehicle.

Wouldn't surprise me if they dropped insurance protecting you from causing damages. As I understand it, the sharp edges and unyielding metal panels may mean they'd cause a lot more damage than an equivalent vehicle. So unless it's legally required, no form of insurance may be economically viable.

The attitude on display at Kia for security is just shocking https://news.ycombinator.com/item?id=41658733

Cybertruck's 3mm stainless steel panels are insurance problem. Stainless steel is hard to repair. Normal PDR does not work. The cost of repair for even the most minor accidents is very high. In many cases replacement panel is the cheapest way.

Tesla’s supply chain does not keep up with demand for repair parts.

I’m not sure that is the case, but if it is, it’s interesting to me as a fairly extreme example of the free market self regulating.

> I’m surprised that the article doesn’t mention the complete lack of pedestrian safety, which is so bad the truck can’t be sold in Europe

I mean that's not a Cybertruck-exclusive problem

It can be registered in Europe, many countries allow individual car import from the US. I have seen a few around; not on public streets (car shows), but with local plates.

You also won't have any issue getting third-party damage insurance in Europe, as the insurance companies are required to make an offer.

> McLarens, Lamborghinis, Jaguars, Bugattis

So they don't insure[1] high end exotics and supercars[2]. I wasn't aware the Cyber Truck was a supercar.

[1] There's also a difference between not offering coverage and actively terminating coverage that was previously offered.

[2] They actually insure basically all Jaguars. There are a couple of people complaining that their rates for a high performance Jaguar model, as a young male, are steep, but that's not exactly the same.

> A quick search reveals there have also been certain Kia and Huyandai models that they don’t insure.

Which I'm fairly certain made the news, too.

Your comment just seems like "Why is this news?"

Even with the Kia and Hyundai theft issues, they didn't terminate coverage, they just issued notices of non-renewal.

They're actively terminating current and open policies for the CyberTruck as quickly as they are legally allowed to. That's why.

Wouldn't people just secure higher cost insurance to offset the risk?

People should take heed in what premiums insurance places on things. They are in the business of pricing risk, independent of political or social bias. They lose money if they have ideologues as actuaries. They make money if their assessments match reality.

So when insurance companies are dropping coverage for things, it's a strong signal that you should too(unless you have a high appetite for risk.)

Insurance costs are financial signal that your financial decisions are bad. They won't insure high climate risk areas? You don't live there. They won't insure high risk vehicles? You don't buy them. You can ignore this if you're wealthy enough to self insure, but for the rest of us, you don't have to believe in the risk; the financial system and the risk modeler data they consume believes in it for you [1].

My homeowner's insurance through Citizens in Florida is approaching $5k/year. It will likely go up at least $1k/year, if not more, next year. Citizens is requiring all homes to carry flood insurance eventually, even if there is no flood risk. I will likely have to pay a surcharge after Hurricane Milton due to Citizens having insufficient reserves for the amount of climate related claim loss they are experiencing (such is the peril of socialized, insurer of last resort systems). This will likely push me to sell my primary residence, my last property in Florida I have not liquidated, and move somewhere with much lower climate risk. This is the system working as intended, telling people to leave places too expensive to insure.

We are collectively internalizing the previously ignored and/or externalized costs. It should be expected that this process will be painful and messy as risk pricing snaps to reality.

(folks not of means who live where climate risk has accelerated ahead of what they can afford should be bought out and provided assistance to relocate to where the risk is lower, and their property acquired by an entity that will hold it in perpetuity to prevent further development or occupancy, for the record; FEMA does this, but this must be done at a much larger scale imho)

[1] https://firststreet.org/

*Floodplain: https://en.m.wikipedia.org/wiki/Floodplain

This what insurance requirements are for. Keep people from doing things with bad risk profiles. As long as insurance is a competitive market, the only activities prohibited by insurance requirements will be those that people wouldn't have been able to afford anyway (long term).

It varies state by state in the US but the level of insurance you're required to buy for operating a vehicle is incredibly low. Generally, the level of insurance you must buy is dictated by the terms of financing because the only collateral the bank has is the vehicle itself.

If I were in the market for a CyberTruck (I'm not) I'd be thinking long and hard about what I'm getting myself into.

> We're going to have piles of cars and homes that no one can use because the risk profile is too high for insurers.

That is entirely the point. If you build a house or vehicle that is horrible from a risk perspective, don't expect someone else to take in that risk.

Strange.

AFAIK in Europe car insurance is obligatory and insurance companies can't refuse to sell it to you (if they did it would be mind blowing, catch 22)

Mostly, but not always, legal auto insurance requirements don't strictly require insurance. If you can afford a cybertruck, you can probably afford to post a $75,000 bond or deposit with the California DMV (increases from $35k on Jan 1, 2025). Assuming you can't get liability coverage elsewhere.

For mortgage insurance, my understanding is if you don't carry property insurance, the lender can obtain lender placed insurance at your cost. That comes from a different, more expensive, market than direct homeowner insurance, but I believe it includes guaranteed issuance. But, if that falls through, I expect the lenders will stop lending, because they can't sell to fannie mae if it has no property coverage.

Homeowners insurance is tricky for both good and bad reasons. Florida's homeowner's insurance market being so dysfunctional is a blinking red warning sign that things like Hurricane Milton are only getting more common. That's a market sending out a reasonable signal- hurricane risk on a low-lying state right next to the Gulf of Mexico and central Atlantic is bad and going to get worse in the future.

But California's homeowners insurance market is screwed up for legal reasons, and it isn't even the legislature's fault or something they can easily fix. It's the fault of Proposition 103, where a whole bunch of massive changes were made to how homeowners insurance worked, in 1988, by a 51-49 vote of the electorate. And the way that prop's work is that the legislature can't amend or change these regulations. The only way to fix it is another proposition to roll back those rules, where the electorate realizes that they did something dumb and agrees to fix it.

Among many other changes, this proposition specifically enumerates what kinds of models an insurance company can use to justify their rates (1). In 1988 global climate change models weren't a thing, so they're not on the list. And while with legislative regulations it would be easy to add an extra model type in as a side-amendment into a much larger bill (that sort of stuff happens all the time!) the California initiative system means that the state legislature can't change any of it. So they are really struggling with the rise of wildfires in particular, the insurance companies run their real models of what the risks will be, and then when they run the approved models they have to try and figure out how to get the approved models to capture that risk and it's really hard to do. The approved models basically force the companies to use the previous seven years of costs only, but if you believe that the risk of wildfires is steadily growing that underlying bias will destroy your company. So the only alternative is to withdraw from the market. Which is why major insurers who can are withdrawing (or threatening to withdraw as part of negotiations to try and force the IC to approve even larger rate hikes!) and smaller, less well capitalized insurers are taking a greater share, but will probably need to be bailed out if there is another bad fire season.

I live- and own a home!- in a nearby state where the real estate market is buoyed largely by people who are leaving California because of their dysfunctional real estate market (Prop 13 is the famous one but these are all pretty bad). So it's actually against my financial interest for California to fix their problems, but I want them to anyway because it's so intensely frustrating for me and I don't even live there.

1: To the directly elected Insurance Commission- another change in Prop 103- who has to approve all rate changes, which is now an ~18 month process, because of a third thing created in this proposition. The Consumer Intervenor's Process means that basically anyone can challenge a rate hike and if they convince the Commission that the hikes were too high then they get their costs and time paid for by the company that lost the rate hike. So there are people in California who make their living as private citizens reviewing and challenging all insurance company rate hikes.

Personal vehicles? Commercial vehicles? Small business?

What's the difference if someone has 8 cars or one car? He can only drive one at a time. And at least one is electric.

As folks get older, they usually become responsible for other people.

I’m imagining quite the redneck-y front yard.

Do you not have 8 computers in your home that are capable of sending email, browsing the web, and doing taxes? Why do you have so many?

> they could just raise rates

Well, they (insurance companies in general ) also dropped a lot of homeowners in certain states, rather than simply raising the rates.

Perhaps they have done some market research and determined that there is an inflection point beyond which raising rates would actually reduce profits due to reduced competitiveness

My understanding is that any damage to the cybertruck unibody frame, no matter how minor, becomes a catastrophicly expensive repair. There are many laws surrounding fair pricing of insurance rates, and Geico might not want to go through the legal work of justifying massive rate hikes specific to the Cybertruck over just dropping such a tiny volume of vehicles, especially if their "profitable" pricing just drives all their customers away anyways. Also keep in mind that in the meantime they're locked into their current rates until each state approves a higher rate.

Good point I had not thought about the remaining parts of the economics if they did go though with something like a rate hike.

> Can someone find more about why GEICO did this? It makes no sense. Furthermore, they could just increase rates if they found accidents too common.

Very few insurers will insure literally anything (back in the day, Lloyds of London were notably unusual in that they would write a policy on basically anything, though you mightn't like the cost). Most conventional insurers will have a line after which they say "this is too risky, we'll leave it to specialist insurers". Ask anyone who's ever tried to get insurance on a non-conventional-construction house.

And it's a pretty niche vehicle; if they do find it unacceptably risky, then dropping it is presumably a fairly easy decision.

Insurers work with data/metrics and generally make decisions based on that alone[1]. I often feel that it's unfair that I pay more as a male, because I am an extremely responsible and defensive driver - fact is, men cause more expensive accidents more often. That's the data, that's what insurers care about.

At some point Geico likely did insure super cars, up until they started becoming highly anomalous in the data. The same has happened to cybertrucks, whether your highly restricted sample demonstrates it or not.

Insurance companies don't turn away profitable customers. Cybertrucks became a problem for Geico, but they are being tight lipped as to why; it might not be a reliability issue.

[1]: https://en.wikipedia.org/wiki/Quantitative_analysis_(finance...

The reasons listed in the article are spot on. Ridiculously high repair costs is enough. With ridiculously high repair costs come extended repair times (rental car and claims management). There comes a point where just increasing the premium price can't offset risk.

There is nothing practical about Cybertruck ("Cybertruck," really?). It's a collector's vehicle.

Nobody will pay for it and they get hit with headlines that say “Geico raises rates on some customers by x,000%!”

If you have to make a price for one-off customer, you end up having to support that use case as long as they are a customer. You may need to change your entire business model just to support them. If they leave, all that change is worth nothing. Unless you're in the business of doing custom work, it's unlikely to be worth the opportunity cost elsewhere.

After a certain point it's not about money. Your time and attention is worth more than they would ever be willing to pay.

If the customer wants it that badly, they can pay the price to get it from someone else.

Telsa insurance snoops on your driving and behavior.

Tesla Insurance is only available in 12 states.

That's quite the conflict of interests.

For example; do you want your insurance provider to be the same entity that sold you the "beta" software responsible for causing your fatal accident?

In the same vein, don't get kaiser permanente health insurance. They will not fight hard on your behalf when their hospital injures you through gross negligence/incompetence.