Insurance is just another step in Tesla's vertical integration of every aspect of the car business.

On August 28, 2019, Tesla officially announced its long-awaited Tesla Insurance service, which initially is available for new Tesla cars in California. Expansion to additional U.S. states will follow.

The main purpose of the Tesla Insurance is to offer insurance at a lower price than currently available on the market (reportedly mainly because of high repair costs of Tesla cars).

Tesla expects that it can offer prices up to 20% lower than insurance companies, and in some cases, the difference might be 30%! On top of that, the entire process will take just a while, and car owners will be able to resign from monthly subscription at any time.

"Starting today, we’re launching Tesla Insurance, a competitively priced insurance offering designed to provide Tesla owners with up to 20% lower rates, and in some cases as much as 30%. Tesla Insurance offers comprehensive coverage and claims management to support our customers in California, and it will expand to additional U.S. states in the future.

Because Tesla knows its vehicles best, Tesla Insurance is able to leverage the advanced technology, safety, and serviceability of our cars to provide insurance at a lower cost. This pricing reflects the benefits of Tesla's active safety and advanced driver assistance features that come standard on all new Tesla vehicles.

Tesla owners in California can purchase a policy in as little as one minute via tesla.com/insurance. For new vehicle orders, customers can request a quote prior to delivery once a VIN has been assigned to their Tesla Account.

Tesla Insurance offers a convenient monthly payment with no hidden fees or charges. Customers may cancel or change their Tesla Insurance policy at any time."

Tesla explains that the lower costs are possible partly because the cars are very safe (active safety and advanced driver assistance are standard) and because it "knows its vehicles best".

Some savings might be achieved thanks to vertical integration as selling vehicles directly eliminates some paperwork/middle man.

We will be closely watching reports about Tesla Insurance offers to see whether 20% or 30% savings are really possible. As of now, the website/offer is undergoing final adjustments:

"We're making some updates to Tesla Insurance and will be back online shortly."

 

This is what we see at the Tesla Insurance site:

Tesla Insurance - Algorithm update in progress.