Tesla Furious After AAA Hits Carmaker With Higher Premiums Due To "Abnormally High Claims"

Tyler Durden's picture

AAA is raising premiums on Tesla vehicles by 30% after data showed that owners of Model S and Model X cars filed claims at abnormally high rates, and that those claims cost more compared with other cars in the same class, Automotive News reported.

Tesla, of course, is disputing the insurer's analysis.

"This analysis is severely flawed and is not reflective of reality," the electric-vehicle maker said in a statement emailed to Automotive News. "Among other things, it compares Model S and X to cars that are not remotely peers, including even a Volvo station wagon."

AAA’ chief actuary said the insurer noticed the anomaly in its own data before confirming it with data provided by a second source, the Highway Loss Data Institute.

"Looking at a much broader set of countrywide data, we saw the same patterns observed in our own data, and that gave us the confidence to change rates," he said.

Other large insurance companies, including State Farm and Geico, said that claims data is a major factor in calculating premiums. But they would not disclose if their Tesla-owning customers would also see rates rise.

The Highway Loss Data Institute report covered the 2014-2016 model years. Vehicles are divided into classes based on size, weight and competing models. The frequency and severity of claims are compared with overall average claims. The report found that the frequency, and cost, of claims related to Tesla vehicles was much higher.

"Teslas get into a lot of crashes and are costly to repair afterward," said Russ Rader, spokesman for the Insurance Institute for Highway Safety, which is the Highway Loss Data Institute's parent organization. "Consumers will pay for that when they go to insure one."

Tesla said the Highway Loss Data Institute's system placed it with the wrong competitors. If it were compared with similar rivals, the company argued, its crash data would not stand out negatively.

Tesla said the high rate of acceleration in both the Model S and Model X make it "false and misleading" to compare against vehicles such as the XC70, adding that the Model S also holds the lowest likelihood of injury, according to an evaluation by the National Highway Traffic Safety Administration.

"We expect Model X to receive the best score for any SUV ever tested," a Tesla spokesperson said.

Collision damage claims for large luxury vehicles are reported 13 percent more frequently than average, and those claims cost about 50 percent higher than average, the Highway Loss Data Institute said. The rear-wheel-drive Tesla Model S is involved in 46 percent more claims than average, and those claims cost more than twice the average, it said.

In the large luxury SUV class, where collision coverage claim frequency is the same as the average for all vehicles and the cost of claims is 43 percent above average, the owners of the Model X file for claims 41 percent more often than average, and those claims cost 89 percent more than average, according to the institute.

New approaches to calculating premiums may eventually benefit Tesla owners, Automotive News reported. Root is an insurance startup that sets premiums based on individual driving behavior. Customers download the Root app and drive with their smartphone in the car for two weeks. Rates are determined from the habits observed over that period.

Semi-autonomous driving features help bring rates down, said Root CEO Alex Timm. The company gives a special discount for Tesla vehicles equipped with Autosteer — part of Tesla's suite of Autopilot semi-autonomous tech — which NHTSA found reduced crash rates by 40 percent.

"Insurance premiums should reflect risk," Timm said. "Autonomous vehicles are safer and will continue to get safer. It's proven in the data."

Tesla said that it is working with insurance companies to properly evaluate the benefits of Autopilot.

"As part of the Insure My Tesla program, Tesla is working with leading insurers resulting in lower prices for Tesla insurance, not higher," Tesla said in its statement. "These leading insurers also appreciate the added safety benefit of Autopilot."

The big question, of course, is that if Tesla owners have to pay considerably higher insurance premiums, what happens to the marginal new Tesla car sale?

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Juggernaut x2's picture

Tesla- just another shitbox US marque

Looney's picture

 

It’s time for Tesla to start making self-towing cars…   ;-)

Looney

bamawatson's picture

#GreenJusticeMatters

green justice demands taxpayers absorb additional premium costs

fairness

justice

BaBaBouy's picture

Bullish...
This is probably gonna INCREASE the demand for Musk-Mobiles...

Every hot shot out there will want one Now...

jcaz's picture

There ya go, Elon- challenge math....

localsavage's picture

NONGAAP vs GAAP   We all know how Elon loves to cook the books.  AAA isn't going with his BS.

RAT005's picture

The weight of most luxury vehicles generally make them better cars compared to lighter cars. The Tesla weight is not really making it a better car. Compared on weight, the Tesla is a bad insurance risk.

Most expensive cars have more steel protecting them.  Tesla expense does not include extra protective steel.

Pool Shark's picture

 

 

Elon Musk: "How dare you even suggest that Tesla be exposed to free market forces!"

 

Winston Churchill's picture

Maybe Elon has done something truly innovative at last:

Shift warranyty claims to someone elses's P & L.

It worked for the WTC and their potential asbestos problems.

nmewn's picture

It seems to be working out well for the crony-socialists in general too. 

Whoop! Can't afford profit sharing or pensions anymore, go talk to the state. Whoop! Can't afford health insurance anymore, go talk to the state. 

And people think this is a free market capitalistic economy?...lmao!...it was stolen by the Bolsheviks of Wall Street & DC long ago. 

Zorba's idea's picture

Spot on...The MAN is relentless at driving unnecessary expenses out the door and off the balance sheet.

Oh regional Indian's picture

I get deep satisfaction from the comment section of Musk articles on ZH.

Cannot wait for this POS to be fully exposed for what he is.

Unfortunately, joo influenced politicos in India are genuflecting to his geeeeeenius and inviting Tesla/Hyperloop and now maybe HYPERBORE and space X to india, with folded hands to boot!

Yuck. Fuck!

mkhs's picture

This is the first time i agree with you.    In regard to musky, what is Sanskrit for douche?

AlaricBalth's picture

It's time for Tesla, with its self driving cars, to become a self reliant company. Let's see if they can survive without taxpayer subsidies and favorable loans.

Freddie's picture

LOL!  Get taxpayers to subsidize Tesla owners insurance and repairs.

I would never buy Gm-UAW_Obama mobiles but I had recent rentals by them and theu were suprisingly good.   Maybe a legacy of Bob Lutz work and after you get $50 billion from tapxayers and wipe out bond holders then maybe quality would come up a bit.

Tesla is shit. Musk is a S African liberal who was probably against apartheid and llike SA white liberals had their bags packed as soon as apartheid was abolished.

evoila's picture

I pointed out that the rates are higher because most of the drivers were chinese and indian, and my comment got deleted. WTF ZH.....

83_vf_1100_c's picture

36 weeks, I doubt your comment was deleted. Based on the number of racial slurs I read here and post myself with regularity I call BS.   Do Chinese and  Indiand people prefer Tesla? Living in rural Texas  one does not see many ethnics asides from white, mex and the odd black.  I am not sure if anyone out here drives a Tesla, don't recall seeing one but then they have that universal jellybean shape demanded by aerodynamics. So many models look like all the others today, boring. Call me when they build a 3/4 ton pickup with a 400 mile range at a competing pricepoint with the big 3 offerings. Then I'll have to wait 5 yrs to buy a used one because, fuck new car prices/depreciation. Oh wait, used battery pack... how is that affecting used EV sales? I'll likely be a late adopter of electric car tech. I'll let others pay for the R&D.

Endgame Napoleon's picture

I liked the boxy shapes of the Swedish cars from a long time ago. All the cars do look the same. We need some visual diversity--some choices. Sales is all about helping customers navigate choices. If there are few choices, it takes all the fun out of it. You can have too many choices. But we don't in this case.

SILVERGEDDON's picture

Evoila - your comment probably got deleted because you used incorrect racial identification terminology. 

You should have referred to the demographic groups in question as : Chinks, slopeheads, rice burners, slants, dog eaters, Pakis, curry burners, bug gobblers, towel heads, or wogs.

And quit being such a whiney bitch. Grow some nuts.  

Freddie's picture

Gooks?

The joke is many Asians are the worst racists going.  They all generally hate each other because they have been killing each other for thousands of years.    The Japanese are among the worst.

Lorca's Novena's picture

Those groups do not fall into the 3 groups were allowed to bash here.  But your right!

Has anyone done a price comparison on buying batteries for these POFS cars as compared to buying gasoline?

johngaltfla's picture

I'm sure old Elon will go to the GOP and demand subsidies for the insurance for his crapmobiles also.

knukles's picture

Luckily Elon won't be going to the GOP for shit.  He can narrow his campaign contributions to the Democratic Wing of the One Big Party Illusion of Democracy Stand In for the Deep State.

Antifaschistische's picture

My friends with Tesla's INSIST on demonstrating the catapult like acceleration...I've told them numerous times just as a warning, to remember that speed (and the subsequent deceleration) kills.

What was Elon thinking Tesla drivers would do when he sold a car faster than a Ferrari?

Lanka's picture

Please, technical, logical reasoning is not permiitted in the comment section.

Antifaschistische's picture

It's a free world Elon.  Tell all your owners to leave AAA.  Maybe you could stike a deal with FLo from Progressive.   Better yet...why don't you call your buddy Warren Buffet up and see if the Geico Lizard will cut him a deal.  

jimmy12345's picture

Actually is thinking about providing insurance for its own cars, which is already does in China.

SILVERGEDDON's picture

Sorry Elon, you fucking moron. Like saying a Prius oughta be equal to your shit box for insurance rates, because they asre both hybrids.

Claims percentiles, repair costs, and all other risk factors are weighed to produce rates tables for insurance coverage costs.

That is why a teenager in a Corvette or Mustang is gonna get ass raped for insurance.

The old fucker in one of your wireless recycled toasters ? Not so much.

Face reality - anyone driving a car that can put out 900 horsepower and instant torque is in over his head unless theym been racing most of their lives, and even them guys are gonna hit the collision jackpot now and then in your vehicles.

And, your vehicles are more expensive to repair, end of story.

Your Mars Attacks ass is lucky you got such a long run on cheap insurance before the book worms figured it out, and adjusted rates accordingly.

It is just business. You got a nearly free NUMMI Toyota plant, and a half a trillion bucks outta the USA and Uncle Sam.

Quit whining, and take it up the ass like a boss.  

TwelveOhOne's picture

Exactly.  Insurance companies know how to actuarliaze; that's how they built the two tallest buildings in Boston!  (Hancock, and Prudential.)

For this snake oil salesman to say "you aren't properly valuing my snake oil" is rather rich!

Mr. Universe's picture

From your own example it appears they know how to actuarliaze in a way that gives a big advantage to the house.

TwelveOhOne's picture

Yes, I agree with that as well.

Freddie's picture

Great post.  All true and sad.   Some of the faux conservatives isreel-firsters over at Free Republic love Space X and the other shit space crap because they love Star Trek and Star Wars.

They are almost as bad as liberals as they love wars, MIC, The Pentagram and endless war and defense spending/looting.

Musk has found endless was to steal from taxpayers.

 

sunkeye's picture

"It’s time for Tesla to start making self-towing cars…   ;-) 

Looney"


The above is as funny a quip I've ever read. Bravo & t/y for covfefe-ing my keyboard

U4 eee aaa's picture

A remote control auto burst into flames would be a nice feature

mkhs's picture

Burst into flames is standard.

drendebe10's picture

Hahahahahaha fukhypocrite musk in his obamyhole 

Arnold's picture

Disposible, Jost like an electric diaper.

AllStarInvestor's picture

The "great" Telsa has no battery technology (you're sitting on 1200 lbs of cellphone batteries) and their solar roof business is predicated on tax subsidies which are going away. Both the batteries and the solar roof shingles are really toxic to manufacture, and they both lose around 10% of their efficiency each year...these roofs won't be able to charge AA batteries after 5yr install.

fiddler_on_the_roof's picture

Wrong. I own a Tesla Model S and LOVE it

mkhs's picture

Really?  If you like getting ass-raped, repeat that.

fiddler_on_the_roof's picture

Wrong. I own a Tesla Model S and LOVE it

ChargingHandle's picture

They lose like 6k per car sold. Must be nice having the tax payers and algos propping you up.

Nightjar's picture

these owners are also easier to milk because they are loaded, so why not

Juggernaut x2's picture

Right- because people coughing up $70K for a pickup are obviously savvy consumers as well

localsavage's picture

People buy 70k pickups because they need them to haul things and have little choice not to drive around virtue signalling about how green they are.

83_vf_1100_c's picture

  Uh, no. Look in the bed of these trucks and see how many are pristine. Take a look at the ball on the recever if it has one, shiny chrome usually. Most never haul anything heavier than a load of groceries. Manly status symbol more often than not. Just stating what I see daily here in TX where every other vehicle on the road is a pickemup truck.  Fuck, many new trucks are 4 door with a 4' bed. That ain't no truck, it's a people hauler, a soccer Mom vehicle.