During an earnings call in July 2020, CEO Elon Musk referred to Tesla Insurance as a “revolutionary” product. Musk predicted that within three months, it could contribute to 30 to 40 percent of the overall value of the Tesla brand.

As it turned out, the hype didn’t even come close to matching reality.

Tesla’s car insurance offering in the United States has faced criticism for its subpar customer service. Tesla car insurance customers have suffered from poor communication, lack of streamlined processes, and rising premiums based on a “safety score.”

Poor customer service

Since 2017, Tesla has been selling auto insurance. The insurance product was initially called InsureMyTesla. Now, it’s called Tesla Insurance Services.

In a recent investigation, Reuters interviewed multiple policyholders. It also gathered complaints from social media and websites like the Better Business Bureau.

Some customers claimed significant delays in receiving payouts for totaled vehicles. One Tesla Model S customer had a major accident resulting in hospitalization. The customer had to wait seven months before being reimbursed for the Model S. Moreover, Tesla still owes the customer tens of thousands of dollars in medical bills.

Others reported great difficulty in reaching someone from Tesla Insurance after an accident. Even when customers did reach a representative, they were often promised callbacks that never materialized.

Tesla’s delays in contacting customers were so long that they violated Ohio Department of Insurance regulations on at least two separate occasions.

The dreaded “Safety Score”

One notable aspect of Tesla’s insurance offering is the daily “Safety Score.” The Safety Score is believed to reflect customers’ real-time driving behavior and is used to determine premium rates.

However, the Safety Score has caused controversy. Customers claim that Tesla vehicles are prone to issuing false collision warnings, negatively impacting a driver’s safety score. This, in turn, can lead to substantial increases in insurance premiums.

Tesla is currently facing two lawsuits related to these claims of false collision warnings. One customer shared her experience of her insurance premium surging by almost 50% due to the Safety Score system.

The state of Tesla car insurance

According to a recent report from CarExpert, Tesla’s underwriter (Markel Group State National Insurance) had the highest number of consumer complaints of California’s top 50 car insurers.

Currently, Tesla provides insurance services in Arizona, California, Illinois, Colorado, Ohio, Maryland, Minnesota, Nevada, Oregon, Texas, Utah, and Virginia.

It remains to be seen if the aforementioned controversies will harm Tesla’s insurance business. Tesla received more insurance premiums in the first three months of 2023 ($14.0 million) than it did in the last nine months of 2022 ($12.7 million).

Image Source: TREV PAGE