[brian_]

It was only a matter of time before those expensive repairs, lack of spare parts, and Autopilot failures had an impact on insurance costs

Can you afford that new vehicle? 25 most expensive car models to insure

Wow, I was being given a hard time by one member for saying that Musk wasn't an experienced automotive manager, but apparently his team has surpassed all traditional manufacturers in at least one way.

The big difference seems to be in the collision component which is 50% higher than any of the other 24 in the list (and so not liability, theft, or other comprehensive coverage components). That presumably is driven by the repair cost which Kevin mentioned, although a lack of parts or slow repair work could drive up cost of rental vehicles provided as a replacement. At-fault collision probability could be a factor as well, although should also increase the cost of the liability component.

 

[Duncan]

I really don't see the problem

The bottom car was a $16,000 car and the insurance was $1100
The Tesla was a $75,000 car and the insurance was $1700

So a car five times the price costs 50% more to insure??

Sounds like a bargain to me!

The Tesla does cost a bit more than an equivalent Mercedes - But a Tesla is not "just" a luxury car - its a damn sight more sporty with much higher performance

If you look at "Sporty Cars" on that list - like the Lancer, then they cost more - as always

 

[brian_]

The bottom car was a $16,000 car and the insurance was $1100
The Tesla was a $75,000 car and the insurance was $1700

So a car five times the price costs 50% more to insure??

Sounds like a bargain to me

The price of the cars in the list is all over the place - the Tesla Model S is not the only expensive car, and the total insurance cost is not closely related to the purchase price. There are $67K and $90K Mercedes models at #19 and #2, but a $16K Scion at #12, for instance.

The Tesla does cost a bit more than an equivalent Mercedes - But a Tesla is not "just" a luxury car - its a damn sight more sporty with much higher performance

If you look at "Sporty Cars" on that list - like the Lancer, then they cost more - as always

The list also does not fall into order by "sportiness", assuming that you don't consider a Kia Optima Hybrid sedan as much sportier than a Mustang, for instance.


This is not a list of 25 random vehicles, sorted by insurance cost; it is a list of all vehicles for which data is provided by the Insurance Institute for Highway Safety, showing only the most expensive 25. That means that there are lots of high-performance cars, and lots of cars more expensive than a Model S, which didn't even make the top (worst) 25. For instance, some Porsche models, and every Ferrari.

Since the analysis is pretty simplistic, and does not eliminate the effect of various relevant factors, the insurance cost may to some extent reflect the drivers. One reason the "sporty" cars are more expensive to insure is that - given the same driving record - the driver of a sport car is assumed to be more likely to have a collision. One could jump to interesting conclusions about Tesla drivers...

 

[MattsAwesomeStuff]

So a car five times the price costs 50% more to insure??

That's not how insurance works.

Easy Counterpoint: The Land Rover costs only 15% less, and yet insurance is 50% less. Teslas are a ripoff. QED.

Actual car repair costs are dwarfed by the medical component, injuries, hospital bills, etc. Which somewhat plateau across all makes and models. There's a medical baseline that represents a large component of the necessary premium. This means differences between vehicles are even larger than they seem, because the first, oh, suppose $500 (made up, just for illustration) is medical. So now an $1100 vs. $1700 isn't 54%, it's ($1100-500) $600 vs. ($1700-500) $1200. A full 100% difference of the component from the actual car type.

This study was an average of existing insurance prices of real drivers for those vehicles, not a baseline cost for an equivalent driver across all vehicles. So these numbers include some selection bias.

The way that this would make a difference is, suppose drivers with a poorer driving history are attracted to Teslas. Then this method of sampling would show them higher than another similarly priced vehicle, even if same driver in each would pay the same amount (fictional scenario we have no info about).


Another component might be that Teslas are attractive to rich people who don't care about their price of their premiums because cost isn't an issue to them. They might not be poor drivers in a crash sense, but poor drivers in a demerits sense, that they don't care how many speeding/etc tickets they accumulate because, it's only money and they're rich, who cares. If Tesla drivers are less scared about the insurance impact of demerits on their license, their premiums will be higher. This is not true of a random person promoted into a Tesla, and thus their premium might not reflect so large an increase.

However, being blind to this, the reverse could just as likely be true...

Perhaps Teslas are attractive to people who're never on the road or who drive like grannies, never get into crashes, always run a clean license, (like, say, stereotypical Prius drivers) and these (high) premiums represent a huge discount to what some normal or average driver would be charged. Maybe it should actually be $2200.

Another thing to consider is that the actuarial models used by the underwriters can be increasingly competitive (closer to cost) the more accurate they are. The more data they have, the more accurate those models can be. Any type of unknown or uncertainty causes a spike in premiums so the insurance company doesn't lose their shirt if they guess wrong.

Supply chain uncertainty? Repair uncertainty? Driver uncertainty? All make higher premiums just for the uncertainty itself, let alone the actual higher cost of those components.

 

[Duncan]

Brian
The fact that there are no Ferraris/Porsches is because the numbers are not there or the writers ignored them - they are INSANELY high insurance

That was a cherry picked list - and it still did NOT show very high insurance

I suspect the mere fact that a LOT of Teslas are based in Californian big cities would add most of that diference

In the UK and here in NZ the same car in two different locations can change the premiums by a factor of two

 

[brian_]

Re-reading the first page of the item, it looks like we have all missed an important point: the data is the amount paid out by insurers ("cost to the insurer per year"), not the insurance premium paid by owners (as the title suggests).

Here's the actual 24/7 Wall St article, rather than USA Today's presentation:
25 Most Expensive Cars to Insure
that also links to the least expensive models, which includes the Chevrolet Corvette, which is not cheap and is generally considered kind of sporty.

So the Telsa Model S is costing a lot to fix per year (whether due to more claims or higher claims)... a lot more than any other vehicle in the list, and the list isn't 25 cherry-picked models, it is the 25 highest average insurance payouts of all vehicles in the data set.

It is likely true that Tesla cars tend to be in major metropolitan areas. That is also true of every sports and luxury vehicle; there are not a lot of Bentleys, Porsches, or Ferraris on farms and in small towns.

 

[Kevin Sharpe]

Here's the organisation that undertakes the research and produces the report;

The Insurance Institute for Highway Safety (IIHS)

"The Insurance Institute for Highway Safety (IIHS) is an independent, nonprofit scientific and educational organization dedicated to reducing the losses — deaths, injuries and property damage — from motor vehicle crashes.

The Highway Loss Data Institute (HLDI) shares and supports this mission through scientific studies of insurance data representing the human and economic losses resulting from the ownership and operation of different types of vehicles and by publishing insurance loss results by vehicle make and model.

Both organizations are wholly supported by auto insurers and insurance associations."

I've attached the list of member groups from the IIHS website.

 

[MattsAwesomeStuff]

the data is the amount paid out by insurers ("cost to the insurer per year"), not the insurance premium paid by owners (as the title suggests).

Nice catch.

That simplifies things. However, the same biases are in place, and, to a very close degree, insurance premiums reflect costs to the insurer. The only additional variable I can think of is their confidence in their amalgamated payouts, with the less data having a larger markup as represented in premiums.

I.E. If the average payout for a vehicle is $1100, they will charge some likely fixed percentage above that (10%, 50%, I don't have a lot of knowledge of insurance markup).

So the entire previous conversation is still relevant except for using it to guess your premium directly (versus relatively).

 

[Kevin Sharpe]

Jack at EVTV has discussed the Tesla insurance issue a number of times... in this video (published July 21, 2017) he includes some interesting stats from last years IIHS report and predicts that Tesla insurance premiums will rise to $6000->$9000 a year

(watch from 22m28s);

 

[Karter2]

Nice catch.

That simplifies things. However, the same biases are in place, and, to a very close degree, insurance premiums reflect costs to the insurer. The only additional variable I can think of is their confidence in their amalgamated payouts, with the less data having a larger markup as represented in premiums.

I.E. If the average payout for a vehicle is $1100, they will charge some likely fixed percentage above that (10%, 50%, I don't have a lot of knowledge of insurance markup)....
.

Depending on the insurer, they will have many other risks to factor into a premium calculation beyond just the repair costs..
Not least of which would be ...the driver age, occupation, claim history, driving offence history, address, annual mileage driven, garaging or street parking, etc etc
Even if you have other insurance policies with the same company can make Significant difference (-20% ).
In other words, to some insurers, the driver can be more relavent than the actual vehicle when calculating a premium figure. !

 

[MattsAwesomeStuff]

Not least of which would be ...the driver age, occupation, claim history, driving offence history, address, annual mileage driven, garaging or street parking, etc etc

Erm, no. I don't think so.



This number is the average cost to the insurer for the vehicle. It amalgamates all of those factors by observation. I.E. When all is said and done, all payouts divided by all policies, what was the average cost.

 

[Karter2]

Erm, no. I don't think so.

This number is the average cost to the insurer for the vehicle. It amalgamates all of those factors by observation. I.E. When all is said and done, all payouts divided by all policies, what was the average cost.

I realise what that number is, it is average COSTS incurred....not related to the premium charged.
It represents the likely cost outcome, not the probability or risk, of that outcome happening, which the insurance company have to asses to calculate a premium .
You are implying that a 19yr old , with convictions and a history of car accidents , living in Compton, with only street parking,...
.....would pay the same premium for the Tesla as a retired university professor, with a clean driving record, living on private estate the Hamptons with a 5 car classic collection all insured with the same company ?

Erm, no i dont think so !

 

[MattsAwesomeStuff]

You are implying that a 19yr old , with convictions and a history of car accidents , living in Compton, with only street parking,...would pay the same premium for the Tesla as a retired university professor, with a clean driving record, living on private estate the Hamptons with a 5 car classic collection all insured with the same company ?

Obviously not.

I'm saying that it amalgamates all of that info, and doesn't reveal the particulars and, thus, induces a selection bias to the dataset.

I'm saying you can't draw a conclusion on it necessarily, because they are are observational only.

But I am saying that, whether it was average premium or average cost to insurer doesn't make much impact on the discussion, because both are observational with the same biases. What distorts one distorts the other the same way. The premium side of things will be slightly higher than the insurance costs, if you care about the actual number, that matters, but that's not the point of this discussion really. The point is how expensive insurance on Teslas are (whether from cost or premium, nearly the same thing) relative and compared to other vehicles.

 

[PhantomPholly]

The big difference seems to be in the collision component which is 50% higher than any of the other 24 in the list (and so not liability, theft, or other comprehensive coverage components)

It was inevitable. Fenders can be repaired, batteries MUST be replaced and are the most expensive part of the car.

 

[Kevin Sharpe]

It was inevitable. Fenders can be repaired, batteries MUST be replaced and are the most expensive part of the car.

I'm aware of two companies that have purchased Model S wrecks from the US and imported them into the UK to extract body parts before selling off the motors, batteries, etc.

This is despite Tesla having the body parts available on the shelf in the UK and at least one of the repairers being a body shop that specialises in high end Mercedes repairs. Restricting access to parts for repairing vehicles is a deliberate Tesla policy.

 

[PhantomPholly]

I'm aware of two companies that have purchased Model S wrecks from the US and imported them into the UK to extract body parts before selling off the motors, batteries, etc.

This is despite Tesla having the body parts available on the shelf in the UK and at least one of the repairers being a body shop that specialises in high end Mercedes repairs. Restricting access to parts for repairing vehicles is a deliberate Tesla policy.

Of that I also have no doubt - my point was merely that, once damaged, batteries truly cannot be repaired and they are expensive.

I don't really take Tesla cars seriously yet anyway. EVs in general are still rich people's toys, and will be for at least another 5-8 years while the price of batteries drops in half again. Expect auto makers to split the battery pack into sections so that if one section gets damaged in a crash the others are still recoverable, and other tricks to reduce the cost of fixing a boo-boo, as they attempt to truly compete on price.

 

[brian_]

It was inevitable. Fenders can be repaired, batteries MUST be replaced and are the most expensive part of the car.

That's my guess, too. Minor collisions typically won't hurt the pack, but if the pack case is compromised at all, they are probably replacing the entire pack at massive cost, rather than repairing it. Insurers may also be writing off (declaring to be a complete loss and sending to salvage) cars with any pack damage, especially since they would likely have significant structural body damage as well. This, of course, is the source of salvage Tesla battery modules for DIY EV projects.

An engine is rarely damaged to the point of requiring replacement in a crash, and Tesla drive units are probably relatively safe from damage, too; however, the battery pack is more vulnerable simply due to its size.

... my point was merely that, once damaged, batteries truly cannot be repaired and they are expensive.

... Expect auto makers to split the battery pack into sections so that if one section gets damaged in a crash the others are still recoverable, and other tricks to reduce the cost of fixing a boo-boo, as they attempt to truly compete on price.

That's already an option. All production battery packs are in modules, and it would be possible to get a replacement outer case and many modules as needed, re-using the undamaged modules. It seems more likely that rebuilt exchange packs would be offered, rather than rebuilding at the service garage (which is how other major automotive systems have gone, particularly automatic transmissions); perhaps this is already available.

 

[mjrickard]

I believe Tesla insurance rates are hurt by a couple of pretty basic things.

1. The combination of aluminum body and basically a requirement that Tesla's be repaired by Tesla or an approved body shop lead to astronomically high costs for even minor damage.

I met a Tesla owner from Kansas city who had had his car repaired from hail damage four times. $14-$19k each time.

Tesla basically insists that Tesla repair the car and they make parts availability and repair data quite difficult to get. This increases repair cost.

2. Because of high repair costs, the Insurance companies are quick to "total" the car. They recover some of the value by remaindering the car to salvage auctions. Your insurance rates are heavily affected by the prices they get from the salvage of the totalled vehicle.

Salvage value is driven by a couple of items. There are a lot of people who purchase salvaged autos and repair them and resell them. But again, Tesla does not make repair data and parts available almost at all. Indeed, they have been known to actively DISABLE cars over the air.

As most of the large electronic parts are under warranty in almost all of the cars on the road, there really isn't any automotive aftermarket for drive trains and batteies parted out.

And so the residual value of Tesla's is reduced.

Musk thinks he's just dealing with greedy insurance companies and seeks to start his own to counter this issue. But he'll run into the same issues unless he assumes repairs, which I guess he could do.

 

[MattsAwesomeStuff]

Restricting access to parts for repairing vehicles is a deliberate Tesla policy.

Is it? Or do they just not have the production capacity to produce extra stock items?


Like, if they're cranking out cars as fast as they can, which still isn't fast enough to meet demand, then any parts they make available for repairs will slow down the production line even further.


I don't think that's the same thing as them being deliberately obtuse and restrictive.