Insuring a Tesla in Puerto Rico is much more difficult than what it may appear on the surface. You’ve just picked up your Tesla from the port in San Juan and feel like you’ve beat the system by paying zero import taxes, but now you find that insuring it is going to cost you 3x-4x a standard car. What in the world is going on? In this article I’ll delve into the history behind the difficulty insuring Teslas in Puerto Rico, how you can get your Tesla insured despite the difficulties, and why you should consider the insurance costs even before you decide to purchase a Tesla to ensure you have the full picture of the cost of ownership.
Let’s go over the reasons why insuring them is difficult at this time:
- As discussed in our article on Auto Insurance in Puerto Rico, auto insurance underwriting on the island is extremely primitive. Companies do not use sophisticated data to price insurance policies, they use only address, age of driver and value of the vehicle.
- In August of 2019, there was an accident in Mayaguez where a Tesla Model X appeared to go rogue during parking. The incident was caught on video and went viral on the internet. Later investigations suggest that the actual cause of the accident was user error, but nevertheless this caused almost all insurance companies in Puerto Rico to stop wanting to insure Teslas. You can watch the video yourself here.
- Not part of the existing island dealer distribution network. It is important to understand that most auto insurance on the island is sold at the point of sale, that is it is sold at the auto dealership at the time of purchase. Not only that, but most policies sold are so called “double-interest”, which means they mostly just cover the bank getting paid for the balance of the loan should the car be in an accident.
- Servicing and repairing Teslas on the island is complicated. As there is no service center on the island, the way Teslas get serviced is that techs visit the island on a periodic basis. As a result when a Tesla needs a service on demand such as when an accident occurs, it can be difficult to arrange it.
- At the time of writing, there are only three insurance companies in Puerto Rico which are actively insuring Teslas, MAPFRE, Multinational and OPTIMA Insurance. That being said, you are likely to be declined even from those three if the only item you are insuring is your Tesla.
- Insurance companies are not obligated to insure anything, and they are by their very nature very risk-averse. As a result, when some uncertainty arises from something like the Mayaguez incident, most insurance companies prefer to take a step back and watch from the sidelines. It should be noted that the problem of expensive Tesla insurance is not necessarily unique to the island, California has similar problems, for example.
What you can do to insure your Tesla
You can contact us as an insurance agency that has experience placing and insuring Teslas even after the Mayaguez incident. Having said that, there are several things you can do to maximize your chances of receiving a quote:
- Submit additional items/properties to insure at the same time. In the insurance industry, this is what is (sometimes incorrectly) referred to as “collateral”. The concept is that companies don’t want to insure your Tesla, but they would like to insure your house/renter’s policy, etc. In return for you bringing your “good” business to the carrier, they’ll be more open to insuring your “bad” business, i.e. your Tesla.
If you feel good about being able to add some other items aside from your Tesla to quote, please contact us for a quote.
What you shouldn’t do
In light of all the issues with insuring a Tesla in Puerto Rico, it may be tempting to just run with Puerto Rico’s compulsory liability insurance and forgo the traditional full-cover policy. As tempting as this may be, I very strongly advise against this, as this will leave you severely underinsured and exposed. Compulsory liability only covers $4,000 of property liability. A fender bender, even a minor one, can blow that limit out of the water and you will be liable for everything.
What is the future for Tesla insurance in Puerto Rico
The coming years will only bring more Teslas to Puerto Rico, and as a result insurance companies will over time become more comfortable with the risk. I fully expect this difficulty with insuring Teslas to be a temporary matter, and that in the next 1-3 years not only will Teslas become easy to insure, but that their premiums will come down to be more in line with cars of similar value.