How to lower Tesla Model 3 insurance?

Here’s How Much It Actually Costs to Own a Tesla

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We checked out the Model 3, the most affordable Tesla car.

Key points

• Some Americans are considering buying Teslas.
• It would cost my mom about $41,000 to own a Model 3 over three years.
• The Model 3 is an expensive upgrade, but it offers good value for the money.

My mom wants to upgrade her Camry SE to a Tesla. Everyone is doing it — over 1 in 50 cars are Tesla these days. If driving an electric car is piloting a Millennium Falcon spaceship, then driving a gas-powered car is steering an angry space tractor.

But Teslas are expensive. The Tesla Model 3, the most affordable option, starts at around $47,000. The Model Y, a compact SUV, starts at about $65,000, and the Model S and Model X, Tesla’s flagship vehicles, begin at around $104,000 and $121,000, respectively.

We’ve heard you can save money by claiming up to $7,500 in EV tax credits. Plus, charging electricity is cheaper than gas. But is it enough to convince us to upgrade?

It’s easy to judge cars by their sticker price, but cars cost more than their upfront price. Here’s a breakdown of how much it actually costs to own a Tesla Model 3 over three years.

Financing

To purchase a Tesla, we’d take out a loan. Drivers can take out loans through the Tesla website. The default APR for a Model 3 Rear-Wheel Drive loan is 5.34%. With a down payment of $4,500 and a six-year repayment term, it would cost about $720 per month to finance a Model 3.

Over three years, it costs about $30,420 to finance a Tesla Model 3, not including potential tax credits. Drivers would pay an additional $25,920 over the next three-year period. Shop around for better deals if you want a lower APR on one of the best personal loans on the market.

Charging costs

Electricity is cheaper than gas. My mom drives about 10,000-15,000 miles per year. Her Camry has an efficiency of about 30 miles per gallon. Let’s assume the following is true:

• Gas costs $4.78 per gallon (AAA average gas price in CA)
• Electricity costs $0.28 per kWh (EnergySage average price of electricity in CA)

Over three years, it would cost about $2,625 to charge a Model-3. It costs about $5,225 to fuel a gas-powered 2021 Camry SE. That’s $2,600 in savings. Longer charging times would partially offset those savings.

However, my mom could charge her car overnight with an at-home charger to reduce the time spent at the Supercharger. Bundling a Tesla wall charger with a Model 3 order costs $400 without taxes, according to the Tesla website.

Maintenance

Electric vehicles are typically cheaper to maintain than gas-powered alternatives. My mom’s 2021 Camry SE is under a lease, so she doesn’t have to pay for routine maintenance. Toyota recommends drivers bring their cars in for service three to four times per year.

Tesla recommends that owners have their vehicles serviced every 12,500 miles or 12 months, whichever comes first. The company also offers a four-year, 50,000-mile warranty on all cars, which covers the cost of any necessary repairs or maintenance.

Over three years, it costs little to nothing to maintain a Model 3. That doesn’t include the gradual loss in operating performance due to normal wear and tear. We would spend less time bringing the car to a dealership for routine maintenance.

Battery trading

You’ll unlikely need to replace the battery within the first three years of owning a Model 3. If the battery malfunctions, you’re protected by a warranty for eight years or 100,000 miles, whichever comes first.

Over three years, it costs nothing to trade in a malfunctioning battery. The warranty covers the batteries for all new Teslas. We’d double-check with the company before making a final decision — things like warranties are updated frequently.

Insurance

The Model 3 is significantly more expensive than a 2021 Camry SE, so we’ll likely have to pay more to get covered. The cost of insuring a Tesla Model-3 is about $2,267 per year, according to CarEdge. The average cost of insuring a Toyota Camry is about $1,474 per year.

Over three years, it costs about $6,801 to insure a Model 3. That’s $2,379 more than it costs my mom to insure her current vehicle.

Tesla offers insurance to drivers in California. Insurance considers things like safe driving status and how much you drive. It’s worth shopping around to ensure we get the best car insurance.

Takeaways

My mom and I want to make sure upgrading to a Model 3 is worth it. We have a couple of budgeting apps we use to keep track of our finances.

We added up the cost of financing, charging, maintenance, battery trading, and insurance. Altogether, we found it would cost my mom about $41,000 to own a Model 3 Rear-Wheel Drive over three years. Yes, we rounded up.

There’s simply no way to quickly bridge the cost-savings gap between a $25,000 and a $47,000 vehicle. Over three years, the Model 3 would cost us more money than it saves. Barring significant software updates, the Tesla would unlikely pay itself off anytime soon.

But when considering low charging and maintenance costs, the Model 3 is cheaper to own than an equivalent gas-powered car. Furthermore, it would cost almost nothing over three years to maintain the Model 3.

We’ll look further into the cost of car ownership. We don’t want to break the budget, but a Model 3 offers good value for its price. I’m crossing my fingers I’ll get to hitch a ride in the passenger seat of a four-wheeled spaceship.

How to Estimate Your Tesla Model 3 Insurance Cost

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Updated September 30, 2022

Getting insurance for your Tesla Model 3 shouldn’t be an afterthought. Tesla insurance costs tend to be higher than that of other electric cars , so you’ll want to factor them into your budget along with other expenses like monthly lease or loan payments.

Tesla Model 3 insurance costs depend on several factors, though, so if one insurance quote is too high, it’s worth shopping around to see if you can get a better deal from a different car insurance company. The model year of your Tesla Model 3 can have an impact on your car insurance costs — but your age and location matter too.

Here’s everything you need to know about the cost of insurance for the Tesla Model 3, and what factors to consider before you drive home with a new EV.

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Tesla Model 3 Insurance Costs Explained

Buying car insurance for a Tesla Model 3 is a lot like buying insurance for any other type of vehicle. Tesla owners can purchase insurance from many of the same auto insurance companies that insure other vehicles, such as State Farm, GEICO, and Allstate.

But each insurance provider has its own process for setting auto insurance rates, and the type of car you drive is one of the biggest factors they take into account.

A brand-new electric vehicle like the Tesla Model 3 is going to cost more to insure than the cheapest car on the market. That said, there are ways to lower your Tesla Model 3 insurance costs, and you can start by figuring out what type of coverage you need.

What Type of Insurance Coverage Do You Need?

According to our figures, the average cost of insurance for a Tesla Model 3 is $318 per month for full coverage and $80 per month for liability only.

It might be tempting to look at those numbers and consider getting liability insurance only, but that probably isn’t a good idea for most Tesla drivers.

After all, liability insurance only covers damage to other vehicles, so if you get into an at-fault accident, your insurer won’t pay to repair any damage to your Tesla.

If you’re financing or leasing a Tesla , then you may be required to have higher levels of insurance coverage in order to meet the terms of your agreement. Likewise, many states have coverage minimums that are higher than the national average.

Even if getting collision coverage and comprehensive coverage isn’t legally required, chances are you’ll want to protect your Tesla vehicle with the best coverage possible. The exception is if you happen to own a really old Tesla Model 3 and the cost of car insurance for it is greater than the cost of replacing it.

Tesla Model 3 Insurance Costs vs. Other Vehicles

It may be the cheapest Tesla on the market, but how do Tesla Model 3 insurance costs compare to other models like the Tesla Model Y and Tesla Model X?

Liability Insurance Costs

On the one hand, there isn’t much difference in the cost of a liability insurance policy for any Tesla vehicle: the average rate is $80 per month for the Tesla Model 3, vs. $79 for other Tesla models and $81 for the average non-Tesla car.

How can the insurance premium for a Tesla be cheaper than a conventional vehicle? Remember, liability insurance covers at-fault damage to other vehicles, and insurers may consider Teslas less likely to cause damage due to their safety features.

The Tesla Model 3 has a 5-star safety rating from the National Highway Traffic Safety Administration (NHTSA) , and a rollover risk of only 6.60%. It also comes with safety features like automatic emergency braking as part of the Autopilot system.

Full Coverage Insurance Costs

The cost of liability insurance for a Tesla Model 3 is about average, but if you’re looking for a policy with full coverage you can expect to pay a bit more.

The average car insurance rate for internal combustion engine vehicles (aka non-electric cars) is $289 per month, but insurance for a Tesla Model 3 costs around $318 per month, for an annual rate of $3,816 per year. That’s less than all Tesla models, which cost an average of $352 per month.

Why is Tesla insurance so high ? Even though Tesla’s safety features may mean you’re less likely to get into an accident, the Model 3 has expensive components such as an aluminum frame and a lithium-ion battery pack that can drive up repair costs. And of course, all of those high-tech driver assist features cost a pretty penny.

Since Tesla’s vehicle warranty doesn’t cover repairs in the event of an accident, you’ll need your own insurance policy to ensure that any repair costs are covered.

Factors that Determine Tesla Car Insurance Costs

In addition to the type of insurance policy you choose, there are several other factors that can result in higher or lower insurance costs for a Tesla Model 3.

Vehicle Age

Is your Tesla a brand-new model or has it been on the road for a while? Buying a used Tesla can be a great way to get lower insurance rates because insurers tend to charge less as the value of the vehicle goes down.

Liability insurance for a new Tesla Model 3 costs around $83 per month, while a Model 3 that’s four or five years old can cost as little as $61 per month.

Location

Where you live can have a major impact on your car insurance premium. Tesla owners in New York pay an average of $170 per month for liability insurance on a Model 3, while Tesla owners in California pay less than half that — or around $70 per month.

Not everyone can relocate to lower their insurance premiums, but it’s worth shopping around when you move to see if you can get a lower rate.

Driving History and Habits

Your driving record can also have a big impact on Tesla Model 3 insurance costs. Our research shows that a single speeding ticket can bump your liability premium up to $120 per month, while multiple tickets can result in a $138/month premium for basic coverage.

The number of miles you drive can make a difference too. If you don’t drive that often, then you may want to consider usage-based insurance , which charges you based on the miles you actually drive rather than an annual mileage estimate.

How to Reduce Your Tesla Model 3 Insurance Costs

Some factors that impact car insurance rates are fixed by your insurance company, but there are a few things you can do to lower your rates.

Choose a Higher Deductible

The deductible is the amount that you pay out of pocket when you file a claim. If your deductible is $250, then that’s the amount you’ll pay before your car insurance policy kicks in. Unfortunately, lower deductibles typically mean higher premiums.

If you’d rather pay less in premiums, you can raise your deductible to $500 or $1,000 — as long as you’re prepared to fork over that amount if you get into an accident.

You may have the option of choosing a different deductible for each type of coverage. Though keep in mind that some insurance coverage, such as property damage, don’t require deductibles.

Ask for a Multi-Policy Discount

If you have multiple cars at the same address, then you may save money by getting a multi-car insurance policy . On the other hand, if you have a young driver in your family who’s heading off to college, you might want to ask for a distant student discount so they don’t drive up the cost of insuring your Tesla Model 3.

You can also bundle other types of insurance policies with the same insurer, such as homeowners or renters insurance.

Compare Multiple Car Insurance Quotes

The best way to reduce your Tesla Model 3 insurance costs is simply to shop around any time you have a change in circumstance. Whether you move to a new state, get married, or improve your credit score, ask your insurer for a better deal.

The best car insurance companies offer plenty of ways to lower your annual rates, from taking a defensive driving course to paying in full when you renew your policy.

You can use our handy comparison tool to find the best rates all in one place:

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Find the Best Insurance for Your Tesla Model 3

Whether you have your heart set on a Tesla Model 3, or want to compare your options before you buy, check out our electric car guides to learn more about buying a new or used electric car. While it’s true that Tesla Model 3 insurance costs tend to be higher than conventional cars, overall Tesla ownership costs may be lower.

And of course, you can always consider leasing a Tesla or buying a used Model 3 to pay less for car insurance than you would for a brand-new model.

Just enter your ZIP code here to compare the best EVs side-by-side:

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Nick Versaw Insurance Managing Editor

Nick Versaw leads Compare.com’s editorial department, where he and his team specialize in crafting helpful, easy-to-understand content about car insurance and other related topics. As an award-winning writer, Nick has seen his work published in countless renowned publications, such as the Washington Post, Los Angeles Times, and U.S. News & World Report. He graduated with Latin honors from Virginia Commonwealth University, where he earned his Bachelor’s Degree in Digital Journalism.

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