Ongoing Issues: Situation Worsened Since Initial Complaints in 2022
The California Department of Insurance (CDI) first raised concerns over Tesla’s insurance practices in 2022. However, the regulator claims that the situation has only deteriorated since then. According to the CDI, “In 2025, the Tesla Companies have already had more complaints, more justified complaints, and committed more violations than in the three previous years combined.”
Legal Repercussions: Potential Fines and Class Action Lawsuit Implications
Tesla and State National could face fines of up to $5,000 for each “unlawful, unfair, or deceptive act,” and up to $10,000 for every “willful” act. Both companies have been given 15 days to respond to the enforcement action.
This legal move could also have broader implications. Notably, Tesla was hit with a proposed class action lawsuit in July, which alleges that the company deliberately delayed and minimized claim payouts.
Product Launch: Tesla’s Insurance Journey Since Inception
Tesla launched its in-house insurance product in 2019, promising cheaper premiums and faster service. However, the launch was plagued by website crashes and unexpectedly high insurance quotes. Despite these initial hurdles, CEO Elon Musk promised that the product would be “revolutionary.”
Just three years after the launch, the CDI observed a major spike in claims-related consumer complaints against Tesla.
Regulatory Oversight: CDI Placed Tesla on Probation in Late 2022
In December 2022, the CDI began holding meetings with Tesla and State National regarding the rising consumer complaints. The regulator discovered that Tesla’s “Head of Claims” position had been vacant for several months and accused the companies of failing to report their claims-handling issues.
As a result, the CDI placed Tesla and State National on a probationary period, monitoring their efforts to reduce violations over six months.
Increased Complaints: Improvements After New ‘Head of Claims’ Hired
The CDI found that Tesla had underestimated both the volume of claims and the staffing necessary to manage them effectively. By April 2023, Tesla had hired a new Head of Claims, and some improvements were reported in claims handling and consumer complaint resolution.
However, a later investigation by Reuters in 2023 revealed that the situation was not as positive as it initially appeared.
Rising Violations: Spike in Consumer Complaints and Legal Infractions
In 2024, the CDI noticed a “significant increase” in consumer complaints and law violations against Tesla. The number of complaints soared from 83 in 2022 to 829 in 2024. Of these, the CDI found that Tesla violated the state’s insurance code in 775 instances.
As of September 2025, the regulator has received over double that number of complaints (1,481) and identified nearly three times as many insurance code violations (1,969).
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Tesla’s insurance division continues to face scrutiny from regulators and consumers alike, with mounting complaints and potential legal consequences highlighting ongoing challenges within the company’s insurance operations.
https://www.newsbytesapp.com/news/auto/tesla-facing-legal-action-over-alleged-insurance-claim-denials-delays/story
