Tesla Inc. (NASDAQ:TSLA) is a leader in electric vehicle sales in the United States and has also branched out into new areas of growth that could disrupt additional sectors. One of those areas is insurance, with Tesla offering insurance policies for its vehicle owners in certain states.
For the first time in three years, Tesla Insurance could be coming to a new state.
Tesla Insurance Readies For New Market
With an increasing number of Tesla vehicles on the roads across America, the company may be poised to expand the number of states its insurance division operates in.
Tesla Insurance is currently offered in 12 states, according to Teslarati. Here are the states where Tesla owners can insure their vehicles with Tesla Insurance:
- Arizona
- California
- Colorado
- Illinois
- Maryland
- Minnesota
- Nevada
- Ohio
- Oregon
- Texas
- Utah
- Virginia
Soon to join that list is Florida, according to a new report. Tesla has filed to launch insurance in the state, according to a report from CoverageR, an insurance website.
Tesla first launched its insurance business in 2019, becoming the first company to provide coverage directly to its own customers, eliminating the need for third-party insurance companies.
The EV giant uses a Safety Score for drivers based on factors like hard braking, aggressive turning, excessive speeding, unbuckled driving, late-night driving and unsafe following to come up with pricing rates on an individual basis.
The launch in Florida would be Tesla's first since 2022, when it launched in Utah and Maryland. At that time, Tesla also filed to launch in Florida, but it did not proceed with the launch.
Tesla also has plans to launch in Georgia and New Jersey, according to the report. The EV company also opened an office in Europe with plans to expand its insurance operations there, but nothing has materialized to date.
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Changing Plans and Costs
While Tesla operates in multiple states, it may soon see changes in one of the largest states in which it operates.
A report from Kelley Blue Book says the state of California could take away Tesla's license for insurance soon, based on recent failures to process insurance claims.
California is the most populous state and also the state with the highest number of Tesla vehicles registered in America.
The California Department of Insurance alleges that Tesla did not handle claims properly and has issued warnings to the company multiple times.
Tesla has until Oct. 18 to prove that it has improved on its insurance claims process or face potential fines or suspension of its license.
For many Tesla owners, using Tesla Insurance is often more cost-effective than alternatives and can also expedite claims, as Tesla utilizes its own unique parts in vehicles.
Earlier this year, a report indicated that Tesla Insurance rates had increased significantly due to vandalism of vehicles and concerns that auto repair and replacement costs would become more expensive.
The report said Tesla models were among the vehicles seeing the biggest increases in prices.
A report in May suggested Tesla is losing money on its insurance division. Data from the S&P stated that Tesla Insurance had a loss ratio of 92.5% in 2023, meaning the company paid out $0.925 in claims for every $1 it received in premiums from customers.
That figure did not include overhead costs for Tesla, items like employee salaries, rent and other costs.
When put together, Tesla Insurance is likely losing money, according to the report.
Once viewed as a potential business segment for Tesla, the company could face more pressure from its largest state and see rising costs that could make the venture not worth the effort.
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Photo: Tesla FSD Image Via Shutterstock
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