California Regulator Accuses Tesla Insurance of Severe Delays and Failures

California’s Department of Insurance (CDI) has taken action against Tesla Insurance for allegedly delaying and denying customer claims. This enforcement follows years of warnings from regulators regarding the company’s claims settlement practices.

Details of the Enforcement Action

CDI’s findings indicate that both Tesla and its partner, State National Insurance Company, engaged in “willful unfair claims settlement practices.” This includes significant delays in responding to policyholder claims and unreasonable denial of claims. According to CDI, these practices have led to “financial harm” and significant distress for policyholders.

Timeline of Events

• 2022: CDI first raised concerns with Tesla regarding claims handling.
• 2025: Increased complaints resulted in more justified claims and violations than the preceding three years combined.
• April 2023: Tesla finally appointed a new Head of Claims after months of vacancy.
• Through September 22, 2025: CDI reported receiving 1,481 complaints against Tesla, identifying 1,969 violations of the insurance code.

Potential Penalties and Legal Impact

The enforcement action may lead to significant penalties for Tesla and State National. They could face fines of up to $5,000 for each unlawful or deceptive act, and up to $10,000 for willful violations. The companies have a 15-day window to respond to these claims.

Rising Consumer Complaints

Complaints against Tesla have steadily increased, escalating from 83 complaints in 2022 to 829 in 2024. Throughout 2025, the number of complaints has reached a staggering 1,481. The majority of these complaints involve Tesla’s failure to respond to claims within the mandated 15-day period and a lack of thorough investigations into the claims.

CDI’s Findings

CDI documented nearly 3,000 violations of state insurance laws by Tesla since 2022. They emphasized that despite repeated notifications regarding mishandling claims, Tesla has failed to implement effective corrective measures. The ongoing rise in justified complaints reflects the company’s persistent challenges in managing claims effectively.

Future Implications

This action may lead to further legal challenges for Tesla. In July, they faced a proposed class action lawsuit regarding their claim handling processes, alleging purposeful delays in claim payouts. As a result, CDI noted potential liability exposure for the company.

The initial vision for Tesla’s in-house insurance, launched in 2019, was to provide cheaper premiums and expedited service. However, this vision has struggled amidst operational setbacks and mounting consumer dissatisfaction.