Can You Buy Bonds Instead of Car Insurance
After a limited and frustrating start, Elon Musk is finally getting his shot at revolutionizing the car insurance industry.
Tesla Insurance launched in Texas this week, free from laws that have shackled its technology in California for the last two years.
The company, which hopes to expand to most other states next year, says drivers in Texas won't be judged on their credit, age, gender or even their claims history. That could mean savings of up to 60% on their premiums.
While that number certainly demands attention, it also doesn't mean Tesla Insurance is automatically the right choice for you.
Are you part of the club?
Right off the bat, Tesla Insurance is only available to Tesla car owners, and there are no plans to change that.
The company says the reason it offers lower rates in the first place is that it "uniquely understands its vehicles" and their "technology, safety and repair costs."
If you don't have a Model S, Model X, Model 3, Model Y or Roadster, you'll have to look elsewhere to find a big discount on car insurance.
And while Musk plans to offer his in-house insurance around the globe someday, you might have a bit of a wait depending on where you live.
"The regulatory process for approval to offer insurance is extremely slow and complex, varying considerably by state," he wrote on Twitter last month.
Why you might switch to Tesla Insurance
Electric cars typically cost more to repair or replace than their gas-guzzling counterparts, and as a luxury electric vehicle, Teslas can be pricier still.
Motortrend recently studied how much it would cost each year to insure the various models available with a traditional provider. Among other factors, these averages assume the owner is a single 40-year-old man with a clean record and good credit score:
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Tesla Model 3: $2,114 - $2,351
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Tesla Model S: $3,673 - $4,143
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Tesla Model Y: $2,118 - $2,227
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Tesla Model X: $3,355 - $4,025
An average driver could save between 20% and 40% by switching, Tesla says, while some drivers could save between 30% and 60%.
The company says it can charge less because it trusts its cars' advanced safety features — and the driving data it harvests straight from your vehicle.
"Tesla uses specific features within the vehicle to evaluate your premium based on your actual driving," Tesla says in a statement. "You will make monthly payments based on your driving behavior instead of traditional factors like credit, age, gender, claim history and driving records used by other insurance providers."
That's actually a huge change. While plenty of other insurers offer discounts if you install a tracking device and drive safely, they typically use that data alongside your credit, claim history and other factors to decide your rates.
Why some might pass on Tesla Insurance
While the company is enthusiastic about its use of data in Texas, laws in California forbid insurers from using behavior-tracking tech to set car insurance rates.
"We want to have the kind of real-time insurance where your insurance costs are based on your actual driving history, which is the right way to do it," Musk said at a shareholders meeting earlier this month. "So, we are trying to get permission from the regulators."
For now, Tesla isn't using data from individual cars and is relying instead on anonymous info pulled from a wide pool of drivers.
That means a model Tesla driver in Cali will pay the same rate as a daredevil who makes hairpin turns and brakes at the last minute — assuming no one actually gets in an accident.
Tesla owners in the Golden State would be wise to compare quotes from multiple companies to ensure Tesla Insurance still offers the best rate.
How all drivers can save on insurance
For most drivers in most states, saving 20% or 60% through Tesla Insurance simply isn't an option. Fortunately, drivers have several ways to slash their premiums, whether they live in Texas or Rhode Island, and whether they own a Model S or a Toyota Corolla.
The No. 1 thing you can do is explore your options.
Insurers look at all kinds of risk factors to decide your premiums, including your vehicle, driving record, ZIP code and even your marital status. And since every insurer uses its own formula, you could find major savings just by shopping around for multiple quotes.
If you haven't compared quotes this year — or in the last few years — you may be paying hundreds of dollars more than you need to. You can use the same strategy to save on home insurance and health insurance, too.
Another way to save on car insurance is to boost your credit score. In most states, insurers can use your credit information to help set your premiums, and they see people with high debt as inherent risk takers.
The more debt you have, the more likely it is you'll pay a high price for insurance, so try some tactics to get out of debt faster.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
Can You Buy Bonds Instead of Car Insurance
Source: https://finance.yahoo.com/news/teslas-discount-car-insurance-rolls-233000590.html