The Tesla Owners Insurance Guide

Auto insurance is something nearly every adult in America will need at some point, but choosing the right coverages for every situation can be difficult. This guide is designed specifically for Tesla owners to help you understand exactly what you need for every situation and is written based on the insurance laws of Illinois. Liability limits

Liability limits are what cover you for any damages you may cause to others while driving your vehicle and are broken into three categories.

Bodily injury single limit

Your bodily injury single limit is the max amount your policy will pay for the injury or death of one individual; the state minimum varies from state to state but in Illinois is $25,000.

Bodily injury combined limit

Your bodily injury combined limit is the max amount your policy will pay for the injury or death of everyone involved in an accident combined; the state minimum in Illinois is $50,000.

Property damage limit Lastly, your property damage limit is the max amount your policy will pay for the damage to any other person's physical property that is caused by you. Most commonly this is their car but can also include any other property you strike with your vehicle; the state minimum in Illinois is $20,000.

All that is required to drive legally on the road and register your vehicle is the state minimum limits of $25k/$50k/$20k; however, this is not nearly enough in most circumstances, as a simple hospital visit for one individual can easily excede $25,000 if they have any type of serious injury. It can also open you up to a lawsuit for subjective damages for their pain and suffering which has no limit to the cost it can carry in legal fees alone and if your limits are only at the state minimum of $25,000 you will receive little to no help in a legal battle from your insurance company, as once those limits are reached any settlement going forward will be entirely out of your pocket. For this reason, I recommend in most cases carrying a limit of at least $100k/$300k and preferably higher as you never know what kind of situation you could end up in. On the property damage side to give an example, if you are a Tesla owner and were to hit another Tesla and total that individuals car based on the current prices of even old used Teslas it would still be well over $30,000 of damage easily eclipsing the state minimum limit of $20,000, but if that car was to be the new Model S Plaid, for instance, that number could easily exceed $100,000. For this reason, the bare minimum I typically recommend for property damage is $100,000, as any damage over your property damage limit can be taken directly out of your pocket and if you do not have the finances to do so your wages can be garnished until the debt is repaid.

What is full coverage?

The term full coverage is a term that was coined by lower-level insurance companies and has been adopted by the majority of car owners but despite what many people believe there is no such thing as full coverage. What people deem full coverage can vary from person to person but is often thought to be the coverages referred to as comprehensive and collision some people may also expand this definition to include emergency roadside service, towing, and car rental. Since there can be confusion on what full coverage means from one individual to another it is best to talk about coverages in their actual terms.

Comprehensive

Comprehensive coverage covers your vehicle for most non-accident-related damages which can include theft, vandalism, weather-related damage, or damage caused by animals. The most common type of comprehensive claim however is going to be a cracked windshield. Most people will experience a cracked windshield at some time or another as it is almost inevitable if you do lots of highway driving due to rocks hitting the windshield at high speed, but can also occasionally happen just from rapid temperature changes such as going through a car wash on a cold winter day. Being that a windshield is the most common type of claim for comprehensive a good thing to keep in mind is your deductible, as most windshield claims are relatively small, a chip can between $75-$150 in most cases while a full replacement for a crack can vary between $700-$2500 depending on the exact make and model you have as well as what calibrations need to be done. This is why I recommend carrying the lowest comprehensive deductible your company offers. Many companies allow you to have a separate $0 deductible for glass claims and some others will direct you towards a $0 comprehensive deductible to accomplish this with only a modest price difference, if you do not carry a $0 glass deductible you will always have an out-of-pocket expense for any windshield damage.

Collision

Collision coverage is what covers your vehicle as a result of an accident, Typically this involves hitting another vehicle; however, most insurance companies also include things such as door dings and rogue shopping carts as collision claims which will be subject to your collision deductible. Collision coverage typically covers your vehicle up to the actual cash value of the vehicle which is usually a combination of the values provided by NADA and dealership comps.

This amount is determined by the insurance company and only ever accounted for in the case the vehicle is damaged to the point the insurance company is considering deeming it a total loss. The threshold at which they typically determine that is if the repair costs reach 75% or more of the car's actual cash value; however, in most cases, the car can simply be repaired which is often the part that can cause the most discourse as insurance companies have a set rate they are willing to pay and will have a host of in-network shops that have agreed to complete repairs for that rate. In Illinois you have the right to have your vehicle repaired at any shop of your choice; however, this does not always mean the insurance company is legally obligated to cover the rate of that shop and they may fall back on the policy language and refuse to pay the difference between their estimate and the shop you chose, so if you choose to have your vehicle repaired out of network you may incur additional out-of-pocket expenses. With Teslas specifically, there is an additional wrinkle, that being Tesla-certified shops. With Tesla being a newer auto manufacturer and also having been known not to provide non-certified shops with very much information on how to repair the vehicles. This won’t matter too much if there is just minor paint damage, or a small dent needing to be popped out. But when you get into parts needing to be replaced this is where it is preferential to have your vehicle repaired at a Tesla-certified shop if at all possible; however, the majority of shops are not certified which significantly reduces the number of options you have for repair if you wish to use a certified shop. But not only do you need to find a certified shop but you will also need to find a shop that will agree on the price with your insurance company or risk paying the difference out of pocket. With this in mind, I would recommend cross-referencing the Tesla-certified shops with the shops in the network of your insurance company to ensure you are not stuck paying anything out of pocket. Another problem can be the wait times as some shops may be able to see you in a couple of days while others can be booked out for 5 months or more. With the limited number of certified shops, they tend to fill up their queue quickly, which is why it is typically advantageous to reach out to multiple shops to find out who will be able to repair your vehicle in a timely fashion. Additionally, the way most insurance policies are written you are not obligated to receive OEM parts but rather what is often called “OEM like” these parts typically must be warrantied by the manufacturer for the same duration as the factory OEM warranty part would be and some insurance companies require their in-network shops to warranty the work done with those parts even longer. These parts also must meet quality standards very similar to OEM parts in Illinois. You do still have the right to have your vehicle repaired with OEM parts but you may have to pay out of pocket for the difference. Some insurance companies also may offer an endorsement to have your vehicle repaired exclusively with OEM parts for an additional charge.

Car Rental Coverage

Car rental coverage is coverage that will pay for you to rent another vehicle as a result of damage to your own. This coverage is what is called secondary coverage, meaning, there must already be a claim for comprehensive or collision for this coverage to pay out and you cannot claim rental car coverage alone.

This coverage can come in a variety of limits from company to company but will typically have limits between $25-$60 per day up to a total of $500-$1500 total. These limits will typically be enough for you to rent a car for roughly 20–30 days depending on the price of the rental car. With Teslas, in particular, rental car coverage is important as parts can sometimes be back-ordered for months due to supply chain issues and increased demand, and that doesn't even take into consideration the actual time it will take to repair your vehicle once parts come in. Because of this I highly recommend selecting the highest rental car coverage limit your company has to offer, it still in many cases won’t cover you the entire duration you will wait for parts but will certainly help ease the financial burden incurred by long-term rental expenses. Rental car coverage can also usually be used for more than just a rental car many carriers also allow you the option to use that amount as reimbursement for things such as using a rideshare service or train ticket. While most people will still certainly prefer to rent a car there are some circumstances where using something such as Uber may be more convenient and can still be covered by insurance.

Emergency Roadside Service and Towing

Emergency roadside service and towing cover you in the case of a mechanical breakdown or a flat tire to pay for you to be towed or have a spare tire put on. With Teslas it will almost always be the former as most models do not carry a spare tire; although, you may elect to buy a spare tire kit that can be stored in the trunk for emergencies; however, the vast majority of Tesla owners will need to be towed to a tire shop and simply have the tire and or wheel replaced. This coverage is one of the ones less important to Tesla owners for the most part as most models come with 4 years of Tesla roadside service included; however, Tesla roadside service does not cover every location, so if you are someone who often travels beyond their service area this may be a coverage you should still consider having for cases where Tesla roadside will not cover it. It should also be noted that towing related to an accident is not typically listed as emergency roadside service, but rather under the collision coverage on your policy with most carriers but can vary from company to company.

Uninsured and Underinsured Motorist

Uninsured and underinsured motorist coverage is coverage designed in the case that you are in an accident caused by somebody without insurance or without enough insurance. This coverage will then act as their insurance, in that case, to help cover the cost of medical bills in the event you are injured. This coverage can only be used in the event the at-fault person has no insurance or that the damages exceed the liability limits on their policy. There is also additional coverage for uninsured/underinsured property damage, this coverage can be applied only to vehicles on liability-only coverage, but will give additional coverage to have your vehicle repaired in the event you are hit by a driver without sufficient liability insurance. This coverage however does not apply to most people as it is typically covered under collision instead. All in all, this is a coverage that is automatically applied to every policy in Illinois and will match your liability limits unless specifically requested otherwise and is not something most vehicle owners will need to be too concerned with.

Medical Payments

Medical payments coverage is to help cover any out-of-pocket medical expenses you incur in the case of an accident. This coverage is typically between $1,000-$10,000 on a per person basis; however, it can go as high as $100,000 with most companies, it can also be declined as it is an optional coverage in Illinois. To use this coverage it does not matter who is at fault and no other coverages need to be enacted for it to payout. You can file a claim exclusively for medical payments coverage and with most carriers, medical payment-only claims do not have an effect on rates. Its specific design is to cover things such as your health insurance deductible and other odds and ends not already covered by your health insurance. It is not designed as a replacement for major medical insurance but rather to ease the stress of medical bills stemming from a claim that has yet to be settled with the other party or your health insurance.

Diminished value claims

A somewhat commonly asked question is can I be compensated for the diminished value of my vehicle due to it having been in an accident? The answer is yes, however, there are some complications and certain rules as to how it can be paid out. A diminished value claim can only be done between the vehicle owner and the other party, you cannot obtain any compensation from your own insurance company as it is a subjective claim and your insurance can only cover absolute damages. There are a couple of ways you can go about attempting to file a diminished value claim, assuming you are going to be dealing with the other party's insurance you can either attempt to negotiate with them yourself or hire an attorney to negotiate on your behalf. Hiring an attorney will most likely be more successful and will likely yield a higher payout; however, you will also be incurring the expenses of hiring an attorney. If you intend to negotiate yourself you will need some evidence to show the amount your vehicle depreciated due to that accident, you may need to get a formal appraisal from a car appraiser who will typically charge you a fee; however, you may also be able to simply show the price difference by inputting your information into something like Kelly Blue Book or getting an offer from a place such as Carvana with and without the accident. It all can vary on how manageable the claim representative you are working with is, just remember it is always a negotiation and sometimes they would rather just settle and get it out of the way to free up their time, and other times they may dig their heels in until the point a lawyer must be involved.

Dealing with someones else's insurance company

When dealing with an insurance company that is not your own you are not subject to the policy language in the same way you are with your insurance, as the only limit you have is the limit of liability associated with that policy and the laws of the state the accident occurred in. This means you can request OEM parts however they are not required in Illinois to use OEM parts so it is unlikely they will pay the difference but it is still possible to negotiate that with them and may be worth a try. You also are not subject to any rental car limit so the rental car must cover you for the amount of time it takes to repair the car reasonably. However, if you choose to use a shop with an excessive wait time they may dispute the amount of time they are required to cover you but there is no set total dollar amount or time limit.

when it comes to the repair shop they will typically steer you towards one of their in-network shops, this is usually the fastest way to have your vehicle repaired and your preferred shop may even be in their network; however you do have have the right to get your vehicle repaired at any shop of your choice and they are obligated to pay for the repairs at that shop; however, if the shop's estimate comes back significantly higher than their estimate there can be some back and forth and they may not be willing to pay that amount and you may have to pay the difference but this can be negotiated and is normally settled between the shop and the insurance company.

What to do if your car is totaled

In the event, the damages to your car exceeded the threshold of repair as determined by the insurance company the company will elect to declare the vehicle a total loss and will offer you a cash settlement, which is essentially an offer to buy your vehicle at the current market price. You are not required to accept their offer and can instead opt to take a reduced payout, keep the car, and worry about the repairs yourself, but in most cases, I highly recommend accepting a cash settlement as getting the car repaired will most likely cost over the amount you receive while also lowering the vehicle’s value due to being in an accident. Additionally Teslas specifically when they are damaged to the point they are deemed a total loss may not be repaired correctly and can have charging issues, which is why it is also recommended never to buy a Tesla with a salvaged title as it will often have access to supercharging disabled. If you elect to go the route of accepting the insurance company’s settlement, it is always good to research the amount they are giving you and cross reference it with how much other similar Teslas are currently selling for as well as looking at both KBB and NADA values to ensure you are getting a fair offer. For those of you who have FSD make sure that is accounted for in the settlement as that can cause a large price discrepancy and the insurance company most likely does not know your vehicle has it before they make their settlement offer.

In general insurance settlements for totaled vehicles are typically quite fair, but if after researching you feel you are being paid under the market value you can negotiate for a higher settlement so long as you have reasonable evidence to back your claim. This works similarly to negotiating for diminished value, and the same principles apply; hiring a lawyer will most often be easier and more successful but you will be losing some of your payout in legal fees

What to do if you are in an accident

If you are involved in an accident or anybody damages your vehicle in any capacity such as opening their car door into yours, you should always and I mean always file a police report. If I had a dollar every time somebody told me the other person said it was their fault and would take care of it, to then hear they turned around and gave a completely different statement to the insurance company I would be a very wealthy individual. It is extremely common for people to accept blame at the scene of an accident and then give a statement that sounds like a completely different occurrence to their insurance company, and without a police report, it’s your word vs theirs. This is why it’s so important to file a police report to protect yourself as the insurance companies will always go with the police report over the individual's statement. If you file a claim and there is no police report to help the insurance company establish fault then you may end up having to pay your deductible for an accident that wasn’t your fault. You should never admit fault at the scene of an accident, if you are in an accident the police should be called immediately once you park somewhere safe and out of the flow of traffic provided the car is driveable. As soon as the police are called you should attempt to obtain the name, address, phone number, and policy number of anybody involved. You are not required however to give your information to anybody other than the police if you so choose, and you should never discuss your coverages with the other person involved.

Rates, pricing, and service

Insurance rates are often where the most confusion can happen when talking with others, as people argue about what company has the best rates or the best service. The truth is no one company is the least expensive nor one company that has the best service, sure there are some that are cheaper on average than others and some may have more consistently good service, but insurance is highly individualized as rates are based off many factors such as age, gender, marital status, address, driving record, credit history, and even your prior insurance company and coverages all are all large factors in your insurance rate with your current company. This is why comparing rates with your friends can sometimes leave you with more questions than answers. When it comes to customer service you will hear a host of different answers about different companies as you can have very different experiences just between agents of the same company and how they handle customer service. Most insurance companies at the corporate level are just concerned with their bottom dollar and are all run fairly inefficiently, some may be more geared toward the independent person who likes to do everything online, and some are geared towards the people who want to go to an office location and talk to someone face to face to about their insurance. But at the corporate level, they are just banks there to pay for the claims, as written out in their policy contract. The difference in experience from company to company mostly comes down to the individual and the agent they work with. Some people may never be in an accident or need to talk to their insurance and are content with an online-only company, others may want an agent who they can call with their questions. At the end of the day with every insurance company, you can find someone to tell you that they are a great company and ten more to tell you they’re a terrible company. What's most important is finding a good and trustworthy agent rather than focusing on the corporate company, as having an agent you can trust will be much more valuable than the claims of a big insurance company. Need insurance?

Tommy Sutton, Licensed Illinois Insurance Producer. Disclosure All opinions in this guide are my own and should not be taken as legal advice please do your research or contact a licensed agent before making any insurance coverage changes. All statements are based on the insurance laws of Illinois and will vary in other states. Thank you for reading.