THE BLOG
04/08/2016 03:02 pm ET | Updated Apr 08, 2016

Getting the Tesla Model 3? Don't Forget About the Insurance

The release of the Tesla Model 3 this past week has been an unprecedented success. Over 300,000 people have put down $1,000 to pre-order the "car of the future", and we over at ValuePenguin have also been excited, but for a different reason. As experts in auto insurance, we were curious how much it will cost to insure this beast of a car. Drivers won't officially hit the road with the Model 3 until the end of 2017, but we could still make a guess based on a few factors and things we already know about the T3.

The Price

The Model 3 is famously known for its affordable price tag of $35,000 compared to its sibling car, the Model S, which goes for $70,000. Expensive cars are generally more expensive to insure than cheaper cars. According to the Institute of Highway Safety, the average price tag of the top five cars responsible for collision insurance claims was $207,000. Conversely, the cars responsible for the least collision insurance claims had an average price tag of $24,000. The logic is simple to follow, if you crash an expensive car, it's going to cost more to repair it, meaning the insurance companies will have to pay out more.

In New York, one of the states with the most Tesla owners, we found GEICO quotes for vehicles priced $15,000 to $20,000 to be about 11% cheaper than those priced $30,000 to $35,000, while those priced 40,000 to 45,000 were about 8% more expensive than those between $30,000 and $35,000.

It's an Electric Car

The Model 3's second biggest draw after its affordable price is the fact it is fully electric. Unfortunately, electric cars, as it turns out, are more expensive to insure than their gas counterparts: about 1.23x more expensive for GEICO customers in New York. For State Farm customers on the other hand, we only found them to be 1.07x more expensive to insure.

It is Also a Luxury Car

In the same Institute of Highway Safety report we referenced earlier, we found that five out of ten worst cars for collision insurance were also luxury cars; the other five being sports cars. As Elon Musk has said before "We don't make slow cars", the Model 3 is a luxury car and thus will be insured as a luxury car. It's understandable that high performance cars may carry a higher risk of incidence than a standard, four-door sedan. Just to make sure that was the case, we took GEICO quotes for luxury cars and normal sedans both priced between $30,000 and $35,000, and found the luxury cars were about 6% more expensive to insure.

What Does it All Mean Then for My Future Model 3?


Well, currently in New York, you can insure the $70,000 Tesla Model S for $1,750 year. Based on what we now know about price, electricity and luxury, we should assume, the nearly half as expensive Model 3 will be less than that.

The Kia Soul EV, an electric car that sells for around $32,000, we found to be insurable for $1,446, again, in New York. Of course, the Kia Soul EV is not a luxury car. If there were an affordable, electric, luxury car, this analysis wouldn't be necessary.

Considering we found that found luxury cars could be about 6% more expensive to insure than regular cars, in addition to our expertise, we'll say the Tesla Model 3 can be insured at around $1,530 a year in New York by GEICO.

That's our answer. Of course, exactly predicting insurance rates is extremely difficult to do, especially since the car is still two years away from release. We use factors such as the price of the car, whether it's electric or gas, and/or a luxury, along with other factors simply as benchmarks to get a rough idea how expensive a car may be to insure. Whether your next car is the Model 3, or a Ford Taurus, you could also use those factors to get a relative idea of how expensive it may be to insure your vehicle.

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