Tesla introduced the latest addition to its list of sleek product innovations last month: car insurance.
Tesla now markets auto coverage through Tesla Insurance Services in select U.S. states, with policies underwritten by licensed carriers (commonly State National Insurance Company in many states). The program is not nationwide, and features vary by state; Tesla’s official support page lists current availability, coverage information, and claims guidance (Tesla Support). In today’s high‑inflation market for auto insurance, interest in usage‑based pricing has grown as premiums have climbed, a trend reflected in the motor vehicle insurance component of the CPI (U.S. BLS CPI). Major independent satisfaction rankings primarily track large legacy carriers; Tesla Insurance itself is not consistently featured as a rated brand (J.D. Power 2024 U.S. Auto Insurance Study).
The news of a car manufacturer insuring its own vehicles made headlines even outside the Tesla bubble, but the idea was met with skepticism by some long-established industry experts. At his company’s annual meeting in May, Warren Buffet, CEO of Berkshire Hathaway,predicted: “I don’t think they’ll make money in the insurance business.” Against that backdrop, Tesla’s differentiator is vehicle‑native telematics used to price risk in many participating states via its Safety Score, while California policies use traditional rating variables and do not use Safety Score for pricing (Tesla Support; Safety Score).
However, Tesla believes it has the key to success: a ridiculous amount of very specific data. In states where it applies, Tesla’s Safety Score converts first‑party vehicle telemetry into a 0–100 score using factors such as forward collision warnings, hard braking, unsafe following, aggressive turning, and forced Autopilot disengagements; the score can influence month‑to‑month premiums. Traditional factors (location, coverages, loss history) still apply (Tesla Support).
“Because Tesla knows its vehicles best,” the company website now positions its insurance around vehicle‑native telematics and in‑app claims. Tesla confirms that state availability, coverage specifics, and whether Safety Score pricing applies are detailed on its support site; in California, Safety Score is not used for rating. The same data that enable personalization also raise privacy questions. Industry research shows telematics adoption continues to rise, but privacy and transparency remain top barriers to enrollment and satisfaction (J.D. Power 2024 UBI Study; Cisco 2024 Privacy Benchmark).
Car insurance could be about to get a lot more personal.
Outside California, Tesla uses its Safety Score—derived from native vehicle telematics—as a key input for pricing and recalculates premiums monthly; in California, Tesla states that policies do not use the Safety Score and rely on approved rating variables instead (Tesla Support). Regulators are sharpening expectations for model governance and the use of external consumer data. The NYDFS 2024 circular lays out governance, testing, and explanation requirements for AI and external data sources in insurance, and the NAIC’s 2024 model bulletin provides a nationwide reference for AI governance that states are beginning to apply. State privacy laws are also expanding, with more comprehensive statutes taking effect in 2025 that can affect non‑GLBA data uses (IAPP state privacy tracker).
There are benefits to drivers that come with insurers having access to more detailed, user-specific data. U.S. adoption of telematics/usage‑based insurance has climbed to more than one‑quarter of auto customers, and when telematics are offered, roughly six in ten consumers accept—especially younger and price‑sensitive shoppers (J.D. Power 2024 UBI Study; TransUnion Insurance Insights). Carrier studies also report improved retention and loss performance in telematics cohorts (LexisNexis Auto Insurance Trends). That said, the broader market has seen sharp premium increases—around 19% year over year in late 2025—driving interest in programs that can translate safe driving into savings (BLS The Economics Daily). Near‑term safety gains generally come from advanced driver‑assistance systems (ADAS) like automatic emergency braking (AEB), which regulators have now mandated on defined timelines and which independent studies associate with fewer relevant crashes (NHTSA AEB final rule; IIHS crash‑avoidance research).
“We could charge less for miles driven in an autonomous mode compared to human-driven miles in the same way insurers treat miles driven by teenagers differently than those driven by their parent,” said Dan Preston, CEO of Metromile, a pay-per-mile car insurance company. In practice today, most consumer vehicles operate with Level 1–2 driver assistance rather than full autonomy; real‑world safety gains and insurance impacts are materializing first through ADAS adoption and performance mandates, while high‑automation fleets show promising but geofenced safety results (Waymo safety data; NHTSA Standing General Order; EU General Safety Regulation).
No one likes to pay more than their fair share, but unless Tesla’s next innovation is a crystal ball, insurers will have to continue to lean on predictions to price their services. With an increased amount of data points on each individual, insurers are able to get closer to a true risk profile. Under Tesla’s model, this can mean month‑to‑month changes tied to recent Safety Score in many states; in California, Tesla notes Safety Score does not affect pricing. The trade‑off is potential premium volatility versus the term‑stability typical of 6–12‑month policies at traditional carriers. Also consider household needs: Tesla’s offering focuses on Tesla vehicles and lacks broad home/auto bundling, while many traditional insurers offer multi‑policy discounts and extensive endorsements (Insurance Information Institute). Always compare like‑for‑like quotes and check the underwriting carrier shown on Tesla quotes; policies are frequently placed with State National Insurance Company, rated A (Excellent) by AM Best (AM Best – State National).
“In short, the evolution of auto insurance is best for consumers when it is personalized, can save them money, and provide a phenomenal experience.”
Dan Preston, CEO of Metromile
Tesla Insurance certainly has the potential to be incredibly personalized, and it may save people money, but is it going to be able to provide the “phenomenal experience” consumers are looking for? An ultra-connected insurer might sound like great news to a cautious driver travelling limited miles, but recent scrutiny of connected‑car and location data underscores why transparency and consent matter. In 2024 the FTC barred a data broker from selling sensitive location data without valid consent (FTC order against Outlogic), and GM publicly paused a driving‑data sharing program. State privacy laws continue to expand in 2025 (IAPP tracker), and California’s privacy regulator is advancing automated decision‑making rules that would heighten disclosures and rights for profiling used in pricing (CPPA ADT rulemaking).
Tesla certainly isn’t the first major company with a wealth of personalized data that has offered exclusive insurance for its own products. Apple offers its own insurance, AppleCare+, with fixed rates and well defined coverage. Car insurance, however, is a lot more complicated, and the data behind the interactions users have with the products can be higher stakes. For example, Apple doesn’t have to worry about its iPhone veering off the road and hurting somebody. For EVs, claim severity and repair complexity tend to be higher than for many ICE vehicles due to parts, labor, and calibration of sensors—factors that influence premiums and cycle times for any insurer (CCC Crash Course).
Elon Musk has confirmed that Tesla already shares “some more detailed information” with insurers. Tesla users are technically able to opt-out of this data collection, but the limitations placed on the vehicle make it impractical. Today, Tesla documents what its Safety Score measures and where it affects pricing (not in California). Meanwhile, supervisors are formalizing expectations for explainability, vendor oversight, and unfair‑discrimination testing in AI/telematics: see NYDFS 2024, the NAIC model bulletin (Dec. 2024), and Colorado’s ongoing implementation of SB21‑169 for AI and big data in insurance (Colorado DOI). Litigation and policy activity are also reshaping third‑party data flows: class actions have alleged OEM‑to‑broker sharing of driving data without informed consent (Reuters coverage), and federal regulators have proposed bringing more data brokers under FCRA obligations if they sell individualized data used for pricing (CFPB proposal).
As the industry continues to leverage user-specific data through voluntary programs, the introduction of Tesla Insurance may signal a move toward more tightly integrated, vehicle‑native telematics. Whether Tesla’s insurance product succeeds or flops, it seems to elevate a transaction familiar to today’s consumers: trading an undefined amount of personal data for (potentially temporary) convenience and cost savings. If you’re shopping in 2025, verify your state’s availability and rating method on Tesla’s site (Tesla Support or Tesla Insurance), understand how Safety Score can change monthly pricing where applicable, and compare quotes with at least two traditional carriers (including a telematics option). Also check proximity of Tesla‑approved repair centers/body shops and ask about calibration and parts timelines—key drivers of claims experience for EVs (CCC Crash Course). Globally, data‑access and consent rules are tightening: the EU Data Act gives vehicle users rights to access and share connected‑car data starting in 2025 under fair‑terms safeguards, shaping how telematics can be shared for insurance (EU Data Act).
