Why insurance on Teslas is about to get way more expensive
By most accounts, it’s been a terrible, horrible, no good, very bad month for Elon Musk’s Tesla—and it might be about to get worse.
Tesla shares surged to their highest-ever peak after the 2024 election, but since mid-December, they’ve been on a sharp decline. (The company lost 15% of its total value in just one day last week.) The EV brand is facing a number of headwinds: Sales have plummeted in Europe and China; the war against Chinese competitor BYD is heating up; and Tesla showrooms across the U.S. are facing an influx of protests and vandalism in response to Musk’s draconian cuts to the federal government.
To top it off, some analysts are now warning that the increased risk of vandalism against Tesla vehicles could result in inflated insurance prices for drivers.
“Kia Challenge” 2025 version
According to a March 2025 analysis by Bankrate, the average cost of full-coverage car insurance for a Tesla Model 3 is $3,495 a year, compared to the national average of $2,678. To put the number in context, an Audi Q5 cost $3,023 to insure, while a Ford F-150 cost just $2,608.
To be fair, car insurance rates are rising across the board, in no small part because of increased damage from climate change-induced extreme weather events. And according to a 2024 report from the National Association of Insurance Commissioners, EVs are typically 20% more expensive to insure than gas-powered cars, a gap that Bankrate attributes to steeper repair costs due to specialized parts. Still, Tesla vehicles tend to be pricier to insure than other EVs: In an interview with Newsweek, Insurify data journalist Matt Brannon confirmed that the Tesla Model 3, Model Y, and Model X are the most expensive EVs to insure as of February 2025. (In 2023, Tesla even launched its own insurance provider, called Tesla Insurance, as a response to the high premiums—but that initiative came with a slate of its own problems.)
Tesla insurance rates could be set to soar even higher. In the same Newsweek piece, Bankrate insurance analyst Shannon Martin explained that vandalism is one factor insurance companies consider when setting premiums. While frequent vandalism isn’t as much of a concern as high-collision rates—which Teslas have also historically struggled with—she says it can factor into how insurance companies set their prices.
A recent example of insurance company backlash against a problematic vehicle can be found in 2023’s “Kia Challenge,” where TikTok users shared a simple “hack” that made it easy to steal certain models of Kia and Hyundai vehicles. The trend led to multiple class-action lawsuits and caused State Farm, Allstate, and Progressive to restrict coverage of the models altogether. In an interview with WCNC Charlotte at the time, Bankrate senior analyst Ted Rossman said that the thefts were driving up available insurance rates by as much as 17%.
Now, Tesla may be facing a problem that’s nearing those Kia and Hyundai proportions. Vehicles at Tesla showrooms, charging stations, and privately owned cars have been burned, painted, and defaced with swastikas. Reports of vandalism against Tesla have become so frequent in recent months that President Trump threatened to call the occurrences acts of domestic terrorism and, in a transparent effort to boost the brand’s reputation, held what was essentially a Tesla infomercial on the White House lawn.
Time will tell whether insurance companies see this trend as enough justification to raise prices or refuse coverage to Tesla owners altogether. In the meantime, this might be the push that regretful Tesla owners needed to give up on disguising their vehicles and trade them in instead.