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Tesla’s Autopilot Has Caused One Insurer To Slash Rates

A Tesla Motors Inc. Software UpdateA Tesla Motors Inc. Software Update
A driver rides hands-free in a Tesla Model S vehicle equipped with Autopilot hardware and software in New York, U.S. on Monday, Sept. 19, 2016. Christopher Goodney — Bloomberg via Getty Images

The results of six-month federal investigation into a fatal accident involving a Tesla has prompted at least one car insurance company to offer a discount to drivers who use the automaker’s semi-autonomous Autopilot system.

Root, an Ohio-based car insurance startup, introduced a program this month that gives Tesla owners a discount if their electric vehicles are equipped with Autopilot. The program was borne out of an investigation by U.S. National Highway Traffic Safety Administration, which found that Tesla vehicles’ crash rate dropped by almost 40% after Autosteer—one component of the Autopilot system—became available.

“Self-driving cars are making our roads safer, and that means less risk and less expense for everyone,” said Root CEO Alex Timm said in a statement. “It’s only fair to pass those savings along to the customers who invest in those self-driving cars.”

The company said in a blog post it believes falling crash rates means the car insurance industry should adjust rates in response.

To join Root, drivers have to download the app and take a test drive, which takes two or three weeks. Once the test drive is complete, Root provides a quote that rewards good driving behavior and allows customers to switch their insurance policy—all through their mobile phone.

The company says it uses artificial intelligence algorithms to adjust risk by factoring in the increased safety of self-driving miles. Root’s app measures Autosteer-eligible highway miles driven during a test drive. A tiered discount is then applied. The discount increases as the percentage of highway miles driven using the semi-autonomous driving tech rises.

Root’s Tesla discount program won’t have a huge impact—at least not as it stands today.

Root only offers car insurance in Ohio at the moment. The startup plans to offer insurance in other states later this year. And its app, which customers use to first qualify for insurance and then manage their account, is only available for the iPhone.

In other words, if you live in Ohio, own an iPhone and a Tesla Model S or Model X that is equipped with Autopilot, you’re in luck. (The company says eventually the discount will be applied to other cars with self-driving tech.)

However, the program is notable because it shows how the development and deployment of autonomous driving features might change the insurance industry.