Tesla has created a customized insurance package

[thisisit]

Insurance as a business relies a lot on past actuarial table data to draw up algorithms to price the premiums. It contains factors like gender, age, occupation etc and the car, which is the highlight here.

If insurance companies do find data supporting the fact that these cars are less prone to payouts, due to Autopilot, they will decrease the premiums. So I am confused what is this whole "car insurance world upside down" all about?

The interesting is this:

> "If we find that the insurance providers are not matching the insurance proportionate to the risk of the car then if we need to we will in-source it," Tesla CEO Elon Musk said in February.

So Tesla as a business recognizes the cost of car has gone up due to insurance and might be actively working on subsidizing the costs.

It can either by paying some part of insurance or providing data on crashes. If it is latter, you have to wonder what kind of business Liberty Mutual is running. Any company will always say their wares are safer but it's up to the insurance companies to collect data and verify.

[dbrian]

He is implying that the algorithms used by insurance companies are optimizing for profit instead of solely accessing the risk of payout. In other words, Tesla drivers are willing to pay a higher premium to mitigate the same risk.

[FLUX-YOU]

>they will decrease the premiums

Idk, I was told point blank that my premiums went up because the company/local insurance agent was struggling. Had nothing to do with my driving.

I might get some sticker price reduction, but I'll end up paying for it down the line somewhere. Insurance isn't primarily about the collective good, so despite technology making us safer, they still have to make profits.

[pbz]

"It contains factors like gender, age, occupation etc and the car, which is the highlight here." -- also a big portion of it is your credit score, which, in my opionion, should not be a factor, but it is...

[whamlastxmas]

I think the more likely reason rates are lower for Teslas is that they log everything happening and send it remotely to Tesla. If someone gets in a wreck and is at fault it's going to be a lot easier for the insurance to see this and deny non-comprehensive coverage.

[matt_wulfeck]

I don’t think that what you’re describing is a significant cost to insurers. Many (most) accidents are shared responsibility. And if you get full coverage (assuming people with Tesla’s generally get full coverage) insurance covers it regardless of whether or not it’s your fault.

The article says that autopilot reduced accidents by 40%, and Elon Musk seems to be frustrated that they’re not taking this into account when determining risk.

[username223]

Interesting question: can Tesla do this because their cars are safer, or because they already include the surveillance tech for which insurers offer discounts?

https://www.nytimes.com/2014/08/16/your-money/auto-insurance...

[justinph]

This doesn't seem very innovative to me. Insurance companies are already taking this into account. I recently purchased a new vehicle (Subaru) with active safety features (EyeSight). The insurance is the least I've ever paid, by a pretty decent amount. The insurance company (Geico) specifically asked if I had the EyeSight package when I signed up.

[jostmey]

Quote: "The National Highway Traffic Safety Administration found that crash rates for Tesla vehicles have plummeted 40% since Autopilot was first installed."

[danmaz74]

When they talk about Autopilot, are they also including assisting technologies that help you avert accidents even when you're driving yourself (technologies that other car manufacturers have too)? I'm asking because AFAIK you can't use the Autopilot in urban driving, and I would expect most accidents involving insurance (including non-fatal ones) to occur in urban driving...

[ucaetano]

"that crash rates for Tesla vehicles"

"for Tesla vehicles"

You'd need to compare this to vehicles from other brands that have had Autopilot-like features for over a decade to actually get a sense of the number, otherwise, it is meaningless. That's like saying:

"Cars with ABS have lower crash rates than same cars without"

[thomas_howland]

There is also the fact that Tesla purchasers tend to be from high socioeconomic classes, even more so than the baseline (extremely predictive) education / occupational category / credit score triptych would indicate. Most insurance risk predictors map directly to SES.

[neurotech1]

The high cost of insurance is partially due to high repair cost. Repairing aluminum car panels is expensive relative to standard steel panels.

Autopilot significantly reduce the crash rate, and Tesla feels other insurance companies don't sufficiently factor this when setting rates.

[moonka]

>Its benefits include replacing Teslas damaged beyond repair within one year.

I don't understand. Most people's insurance will cover the replacement value of your car if it is in an accident. Is this referring to something else?

[greglindahl]

I've never had a car policy that covers the replacement value of the car. Instead, it covers the value of the car. Big difference.

[mhandley]

If you wreck your brand new Model 3 next week, how long to get a replacement? The waiting list is quite long.

[uptownfunk]

Insurance companies are actually undergoing something of a silent revolution in terms of underwriting policies. Many of them are upgrading to some sophisticated machine learning algorithms instead of the traditional actuarial tables. Assuming tesla cars are really safer you would see the algorithms pick up on that (there may be some lag until they catch on) and then price the policies appropriately, assuming that the insurance company is willing to pass that value to the customer.

[jpalomaki]

Another thing is insurance which takes into account how much, where and how you drive. Smart car companies like Tesla are in good position to start offering these as well.

[Animats]

"Its benefits include replacing Teslas damaged beyond repair within one year."

They make you wait for a year to get a replacement car?

[jhurliman]

I just got a quote (Model X, California) that is 42% higher than my current monthly premium through USAA :-/.

[sschueller]

"which lowers overall insurance costs by factoring in the vehicles' Autopilot safety features"

Are they saying the autopilot makes the care safer? Hasn't the opposite occurred? [1]

[1] https://www.ntsb.gov/news/events/Documents/2017-HWY16FH018-B...

[chc]

No, the organization that put that slideshow together concluded at the end of its investigation that the primary causes of the crash were the truck failing to yield properly and the Tesla driver not paying attention for a long time. Their only recommendation to Tesla was to make Autopilot nag drivers more strictly if it doesn't detect that they're paying attention, which Tesla followed. Another agency investigating the crash, the NHTSA, concluded that they could not find a safety risk with Autopilot, they could not find any defects warranting a recall, and they noted that in broad terms Autopilot appears to have increased driver safety.

https://www.ntsb.gov/news/events/Documents/2017-HWY16FH018-B...

https://static.nhtsa.gov/odi/inv/2016/INCLA-PE16007-7876.PDF

[znebby]

No. Perhaps in a couple of cases, but on average, I believe it has shown to be safer.

[dripton]

The safety benefit is from the automated emergency braking system, which Tesla has coupled with the Autopilot package. It's not from Autopilot itself.

[perl4ever]

I don't understand what the maintenance costs have to do with the price of insurance.

[emondi]

Maybe an incorrectly maintained car is less safe.

[bagels]

Perhaps due to lower fraud rates involving cars that have failed.

[lttlrck]

And why cost of repair isn’t mentioned.

[jaclaz]

Dupe, previous:

https://news.ycombinator.com/item?id=15524800

[sctb]

The previous story probably didn't get enough attention to qualify this one as a duplicate, so we've left it. (See https://news.ycombinator.com/newsfaq.html)