Tesla just launched its auto insurance service in California

Says it will deliver rates 20 percent and even as high as 30 percent lower than other insurance providers


Early adopters of the Tesla electric vehicles have historically found it difficult getting cost-effective insurance.

But as these cars have become more commonplace, with more data for the cost of repairs available, more insurers have entered the market and so costs are starting to go down.

What Happened?

Tesla has started selling auto insurance policies to owners of its vehicles in California, in what may be the company’s first step toward providing coverage for a fleet of driverless taxis.

The company is promising to deliver rates 20 percent and even as high as 30 percent lower than other insurance providers.

Why It Matters

The insurance offering may give Tesla a way to create bigger margins with a product that doesn’t require as much money to set up as the process of designing and manufacturing cars.

Tesla says its deep insight and familiarity with its own vehicles gives it a better understanding of the technology and repair costs.

This helps eliminate fees taken by traditional insurance carriers.

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