AAA Hits Tesla Owners With Huge Insurance Hike

The AAA will charge Tesla Inc (NASDAQ:TSLA) car owners as much as 30% more for auto insurance because claims on the Model S and Model X had higher frequency and higher costs compared with other cars in the same classes. TSLA stock is down less than 1% this morning.

Tesla Inc (TSLA)

A report by Automotive News said that the automobile association is basing its rate hike on data from the Highway Loss Data Institute. Tesla is disputing the analysis, according to the report.

According to industry data, the Model S is classified as a large luxury vehicle — cars that are 90 to 110 cubic feet and between 3,500 and 4,500 pounds — a class that includes the Volvo XC70, Audi A6, Mercedes-Benz E class and BMW 5 series.

The report quoted the chief actuary of AAA as saying they noticed an anomaly in company data and then investigated other data sources, primarily relying on the Highway Loss Data Institute because of its scope, to confirm its analysis. “Looking at a much broader set of countrywide data, we saw the same patterns observed in our own data, and that gave us the confidence to change rates,” Anthony Ptasznik said, according to Automotive News.

According to the highway institute, Model X owners file for claims 41% more often than the average car in its class, and that these claims cost 89% more than the average.

While the report said that while other major insurers such as State Farm and Berkshire Hathaway Inc. (NYSE:BRK.A, BRK.B) unit Geico consider claims data as a significant factor in computing for premiums, it wasn’t yet known if the two companies will also be increasing rates for their Tesla policy holders.


Article printed from InvestorPlace Media, https://investorplace.com/2017/06/aaa-hits-tesla-owners-huge-insurance-hike/.

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