An insurer has to pay the manufacturer the full price of the vehicle. Tesla's margins are approaching 25%. Tesla is betting its cheaper for them to replace the car at cost than the PR hassle because people suck at math. In the event another few cars go up in fire, Tesla eats the vehicle manufacturing cost in return for goodwill and people continuing to purchase their vehicles.
You have to admit, Elon stands behind his vehicles, literally with his personal wealth. Compare that to other luxury brands. It's brilliant.
