Tesla Motors has plans to get into the insurance business as its self-driving cars have the potential to upend the industry.
The Palo Alto-based car company is starting a new program called InsureMyTesla in Australia and Hong Kong, according to a report from Electrek.
The custom insurance plans are underwritten by larger insurance
partners. Tesla is partnering with AXA General Insurance in Hong Kong
and with QBE Insurance in Australia.
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The
plans currently include coverage for home chargers; new vehicle
replacement if the vehicle is less than 36 months out from first
registration; coverage for damage to the Tesla Home Wall connector; and
an any driver policy. The cost of the policy in Australia starts around
$1,200 AUD per year ($900 USD), according to the report.
Why
is Tesla moving into the insurance market? For now, its plan could
solve gaps in coverage by traditional insurance providers. Insurers
don’t always recognize the variances between Tesla models, which can
have customers of lower-end models paying the same premiums as buyers of
the more expensive models. Tesla obviously recognizes the nuance
between its Model S60 and Model S75 and can adjust premiums.
The
car company is also looking a few years down the road. As self-driving
cars become more popular, they have the potential to disrupt the entire
automotive insurance industry. Close to 90 percent of all car accidents
in the U.S. are caused by people, according to NHTSA. But what happens
when we take humans out of the equation? What if most people don’t even
own their own cars?
It’s
likely people won’t need to carry nearly as much insurance as they do
now, which will force the insurance industry to reconsider its business
model. Tesla will make sure its customers are covered regardless of what
happens to standard insurers.
There
will still be some need for insurance as autonomous vehicles will still
see incidents and accidents. The Securities and Exchange Commission is
currently investigating whether Tesla violated securities regulations by
failing to properly disclose information about a fatal crash that
occurred May 7 and involved a 40-year-old Florida man, Joshua Brown, who
was driving a Tesla Model S with the Autopilot feature engaged.