State officials allege Tesla repeatedly delayed claims, denied payouts, and ignored warnings from regulators
- California accuses Tesla Insurance of systemic violations in handling claims.
- Complaints soared from 21 in 2022 to nearly 2,000 through September 2025.
- Tesla and partners risk license suspension and $10,000 fines per violation.
Tesla is an automaker that has its fingers in several other industries. One is insurance, which it has long promised to be the best in the business for its customers. According to authorities in California, not only is it not a leader, it’s actually so bad that it might lose its license to offer insurance altogether.
The California Department of Insurance (CDI) announced on October 3 that it’s taking enforcement action against Tesla Insurance Services, Inc. and Tesla Insurance Company, alongside State National Insurance Company, which underwrites Tesla’s policies in the state.
Regulators say the three companies failed to comply with California’s claims-handling laws over and over again. It accuses all three of “significant harm” to Tesla drivers who held policies with them.
Read: Tesla Owners Brace For Soaring Insurance Costs And Even Bans As EV Attacks Escalate
In plain terms, Tesla Insurance Services acts as the broker selling the policies, while Tesla Insurance Company and State National handle the underwriting and claims.
A Pattern of Misconduct
Together, the CDI says, they’ve developed a pattern of misconduct so severe that the state may suspend or revoke their licenses and impose monetary penalties of up to $10,000 per willful violation.
According to the department, Tesla’s alleged offenses include extensive delays in paying valid claims, unreasonable denials, and failures to conduct “thorough, fair, and objective investigations.”
The department also accuses Tesla of not informing policyholders of their right to have claims denials reviewed by the state.
Complaints on the Rise
This isn’t an issue that the state just started tracking, either. In 2022, it noted 21 justified complaints against State National Insurance Company, which accounted for 40 regulatory violations.
The next year, those figures grew to 63 and 195, respectively. In 2024, Tesla Insurance Services joined the fray, and together, complaints rose again to 291, along with 835 violations.
So far in 2025, the department says it has received nearly 2,000 complaints, over 500 of which were justified, with more than 2,000 regulatory violations. Now, Tesla Insurance Services, Tesla Insurance Company, and State National have 15 days to respond to the accusations before they face a potential administrative hearing.
If the department prevails, the companies could be barred from transacting insurance business in California and hit with significant fines.
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