Ongoing Issues with Tesla’s Insurance Practices
Situation Worsened Since Initial Complaints in 2022
The California Department of Insurance (CDI) first raised concerns about Tesla’s insurance practices in 2022. However, the regulator reports 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
Tesla and State National face potential fines of up to $5,000 for each “unlawful, unfair, or deceptive act” and up to $10,000 for every “willful” violation. The companies have 15 days to respond to the enforcement action. This legal move could also have far-reaching implications, especially considering Tesla was hit with a proposed class action lawsuit in July. The lawsuit alleges that Tesla deliberately delayed and minimized claim payouts.
Product Launch: Tesla’s Insurance Journey
Tesla launched its in-house insurance product in 2019, promising cheaper premiums and faster service. However, the launch faced significant hurdles, including website crashes and unexpectedly high insurance quotes. Despite these issues, CEO Elon Musk vowed that the product would be “revolutionary.” Just three years later, the CDI noted a major spike in consumer complaints related to Tesla’s claims handling.
Regulatory Oversight: Probation and Early Concerns
In December 2022, the CDI began engaging directly with Tesla and State National regarding the rising 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 problems. As a result, Tesla and State National were placed on a probationary period, during which CDI closely monitored their efforts to reduce violations over six months.
Improvements Following Leadership Changes
The CDI found that Tesla had underestimated the volume of claims and the staff required to handle them effectively. By April 2023, Tesla appointed a new Head of Claims, which led to reported improvements in claims processing and consumer complaint resolutions. However, a Reuters investigation later that year revealed that the situation was not as positive as initially portrayed.
Rising Violations: A Significant Spike in Complaints
In 2024, the CDI observed a “significant increase” in consumer complaints and violations of insurance laws involving Tesla. Complaints skyrocketed from 83 in 2022 to 829 in 2024. Out of these complaints, the CDI found that Tesla had violated the state’s insurance code in 775 instances. By September 2025, the regulator had received over double the number of complaints—1,481—and identified nearly three times as many insurance code violations, totaling 1,969.
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Tesla’s insurance operations continue to face intense scrutiny as the number of consumer complaints and regulatory violations grow, highlighting ongoing challenges in claims handling and compliance.
https://www.newsbytesapp.com/news/auto/tesla-facing-legal-action-over-alleged-insurance-claim-denials-delays/story
