I work in insurance, and my own car insurance bill still surprised me.
When I traded my paid-off Volkswagen Atlas for a used 2018 Tesla Model 3 Long Range, I expected a car payment and new charging costs. I didn’t think as much about how the switch would change my insurance. But when I compared my six-month premiums, the Tesla cost about $225 more than the Atlas, a jump of roughly 29%.
Rates go up for many reasons, and you can read more about why your car insurance keeps going up. What matters is what you do next. Here’s what happened with my policy, why Teslas tend to cost more to insure and 13 ways to bring your rate back down.
What happened to my premium after I switched cars
My previous car was a 2021 Volkswagen Atlas SE. It was paid off, which was great, but I spent more than $300 on gas over three weeks. That got me thinking about alternatives, and I eventually decided on a used 2018 Tesla Model 3 Long Range.
I traded in the Atlas for $11,500, put down $3,000 and financed the remaining amount at 5.99% over 48 months. My monthly payment is $259, including a service contract.
Then I compared what I was paying for insurance:
| Make model | Six-month premium | Monthly | Annual |
|---|---|---|---|
| 2021 Volkswagen Atlas SE | $769.33 | $128.22 | $1,538.66 |
| 2018 Tesla Model 3 Long Range | $994.20 | $165.70 | $1,988.40 |
| Difference | $224.87 | $37.48 | $449.74 |
That’s about 29% more for the Tesla. Insurance costs depend on the vehicle, your coverage, your deductibles, your insurer and other individual factors. This is what happened in my situation, and someone else’s experience could be very different.
I should be upfront that my profile helps. I have excellent credit and no accidents or tickets on my record and I get a long list of discounts through USAA: annual mileage, automatic payment plan, daytime running lights, earned safe driving (through the SafePilot telematics program) and passive restraint. I also get savings for payment history, having multiple USAA products, length of membership and family military service. Those factors help explain why my Tesla premium is lower than you might expect, and they preview several of the savings strategies below.
Switching cars also meant rethinking my coverage, and a few of my choices pushed my premium in different directions:
- Comprehensive and collision: My Atlas was paid off, but my Tesla is financed, and my lender requires both coverages, which I had previously.
- Deductibles: I changed my deductibles from $1,000 to $500, which generally means paying more for the policy in exchange for paying less out of pocket for a covered claim. I wouldn’t have done this – I have money in savings to cover a deductible in case of a claim – but my contract with the lender requires it.
- Rental reimbursement: I went from a larger rental vehicle to an economy car.
- Property damage liability: I lowered my limit from $300,000 to $100,000. That’s an important trade-off. Lower liability limits can leave you responsible for more costs if damages exceed your coverage, so I wouldn’t recommend making that change just to reduce your premium. However, I have an additional $1 million umbrella policy (also with USAA), so I feel more comfortable doing that than I would without it.
Going through this reminded me that changing vehicles is also a chance to review your insurance carefully and check the actual numbers rather than make assumptions.
Why do Teslas cost more to insure?
According to our data, insuring a Tesla costs an average of $4,140 a year, or $345 a month, for a full coverage policy with limits of 100/300/100, $500 collision and comprehensive deductibles and an annual mileage of 10,000 miles. That’s generally more than insuring many other vehicles, and there are a few reasons why.
Teslas have hefty purchase prices and are expensive to repair. Depending on the model, replacing a Tesla battery can cost anywhere from $13,000 to $20,000. The advanced technology in these cars also drives up repair costs after an accident, and Teslas can only be repaired at Tesla-approved service centers because of the specialized training and equipment required.
What you pay also depends on the model. The Model S and Model X cost more to insure than the Model 3 and Model Y. The average full-coverage policy for a Model 3 is $3,466 per year, while a Model S averages $5,074 per year, a difference of $1,608.
| Model | Average annual cost | Average six-month cost | Average monthly cost |
|---|---|---|---|
| Tesla Model 3 | $3,466 | $1,733 | $289 |
| Tesla Model Y | $3,529 | $1,765 | $294 |
| Tesla Model X | $4,805 | $2,403 | $400 |
| Tesla Model S | $5,074 | $2,537 | $423 |
My own Model 3 premium of $994.20 for six months came in well below the $1,733 six-month average above. The average is based on sample driver profiles, while my premium reflects my own driving history, credit, discounts and the age of my vehicle. Your rate depends on those same kinds of factors, along with where you live, the coverage you choose and the insurer you pick.
Read the full breakdown in our guide to why Tesla insurance is so expensive.
What to do when your car insurance goes up
Start by finding out why. If the increase comes from something you changed, like a new car, a move or an added driver, you’ll know where to look. If it showed up at renewal with no change on your end, call your insurer and ask what drove it.
Then work through the strategies below. Not every tip will apply to every driver, so review each one to see whether it could work for you. The biggest savings usually come from the first few, but the more of them you use, the lower your rate can go. For a deeper look, see our full guide on how to lower your car insurance costs.
- Compare multiple quotes. Rates vary a lot from one insurer to the next, so this is the best place to start. CarInsurance.com data analysis shows drivers save an average of $694 a year by switching insurers. I’d compare at least once a year and after any big change, like a new car. I got a quote for the Tesla from Travelers, but it was only a $7 difference, which isn’t worth the switch.
- Bundle policies. Combining your auto policy with another policy from the same insurer can save you money. On average, the discount is about 13% for home insurance, 12% for condo, 6% for renters and 4% for life insurance. Bundling doesn’t always win, so compare it against buying your policies separately. I get a discount for having multiple USAA products.
- Increase your deductible. A moderate increase in your collision and comprehensive deductibles can lower your premium by 15% to 30% on average. Going from $250 to $500 saves an average of $282 a year. I went in the other direction, lowering mine from $1,000 to $500, so I’m paying more for the policy in exchange for paying less out of pocket if I file a claim. Whatever you choose, make sure you can afford the deductible after a loss.
- Adjust coverage levels. Moving from full coverage with 100/300/100 limits to liability-only coverage with 50/100/50 limits can save an average of $1,544 a year, and dropping collision and comprehensive coverage can make sense for an older car. But if your car is financed or leased, your lender will require comprehensive and collision.
- Compare rates before buying a car. A car’s price tag doesn’t tell you what it will cost to insure. Get a quote using the car’s VIN before you sign anything, or compare insurance rates by vehicle while you shop.
- Maintain a clean driving record. Good driver discounts can save you up to 17%, and tickets, at-fault accidents and DUIs can cost you those discounts and raise your rates. Many insurers look for at least three years with a clean record. My record has no accidents or speeding tickets, which helps.
- Pay in full. Paying your premium upfront instead of in installments saves an average of 9%, or about $232 a year on a full coverage policy ($2,346 annually vs. $2,578). Some insurers also discount automatic payments; I get an automatic payment plan discount.
- Ask about multi-car discounts. Many insurers discount policies that cover more than one vehicle. Add every car and driver in your household to each quote so you can compare accurately.
- Ask about low-mileage discounts. Drivers who log fewer than 7,500 miles a year earn an average discount of 9%, and those driving 10,000 to 11,999 miles earn 7%. CarInsurance.com’s rate methodology uses 10,000 miles a year as the average, so let your insurer know if you drive less than that.
- Consider telematics or usage-based insurance. Signing up for a program that tracks your driving habits, like speed, braking, mileage and phone use, can save you about 10%. I’m in the SafePilot telematics program, which earned me a safe driving discount. If you rarely drive, a pay-per-mile policy is another option.
- Reassess after life changes. Mine was a new car, but marriage, a move, a new job or paying off your loan can change your rate too. Marriage lowers premiums by an average of 9%. Tell your insurer as soon as something changes.
- Use anti-theft devices. Installing them can earn about a 2% discount. If your car already has them, make sure your insurer knows.
- Go paperless. Switching to email for your bills and policy documents can earn about a 3% discount with many insurers.
Beyond these 13 tips, ask about discounts that fit your car and your situation. Through USAA, I also get discounts for daytime running lights and passive restraints, plus savings for payment history, length of membership and military service. USAA isn’t open to everyone (see who’s eligible), but other insurers may offer similar discounts, so ask what you qualify for. And because most states let insurers use a credit-based insurance score, paying your bills on time can help your rate, too.
Discounts and savings vary by insurer and state, so your results may differ.
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Look at the whole cost of the car
My insurance bill was only one piece of this switch. With the Atlas, I didn’t have a car payment, but I was spending a significant amount on gas. With the Tesla, I now have a $259 monthly payment, plus charging costs and insurance. Not to mention the home charger I still need to install. And with any used vehicle, maintenance, repairs and the car’s condition are worth considering, too.
I’m comfortable with my decision, but the experience reminded me how important it is to consider the overall cost of owning a car, not just a single expense.
What you should do before switching cars
If you’re thinking about changing vehicles, here are five things I’d recommend before making the switch:
- Get a quote using the car’s VIN before you sign anything, so you know what you’ll actually pay.
- Ask your lender what coverage and deductibles they require if you’re financing.
- Compare quotes from several insurers. Rates for electric vehicles can vary from one company to another, so don’t assume every insurer will charge you the same.
- Be careful about lowering your coverage just to save money. If you cause a serious accident and the damages exceed your policy limits, you could be responsible for the difference.
- Include the full cost when calculating gas savings. Include the costs of insurance, charging expenses and car payment so you’re looking at the overall cost of owning the vehicle and not just the fuel savings.
My biggest advice is to look at the full cost of owning the car before you decide. Get an insurance quote for the specific vehicle you’re considering, review the coverage you’ll need and make sure the numbers work for your situation.
Resources & Methodology
Methodology
CarInsurance.com collected car insurance rates for various Tesla models from Quadrant Information Services. The rates are based on the sample profile of a 40-year-old driver carrying a full coverage policy with limits of 100/300/100 and $500 collision and comprehensive deductibles. To evaluate the premiums, we compared 67,566,780 insurance quotes from 57 insurance companies across 510 ZIP codes nationwide. Read the detailed methodology for more information.
The Atlas and Tesla premiums in this story come from my own policies. They reflect my coverages, deductibles, insurer, driving history, credit and USAA discounts, and they aren’t averages.
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