California probes Tesla insurance for unfair claims practices
The California Department of Insurance has launched an investigation into Tesla's insurance unit for alleged unfair practices that have harmed policyholders. The probe accuses the company of delays in claims processing and unreasonable denials. Potential fines could reach millions due to thousands of violations since 2019.
Tesla's insurance operations, launched in 2019, are facing scrutiny from the California Department of Insurance (CDI). The regulator has identified approximately 3,000 regulatory code violations, accusing Tesla and its partner State National Insurance Company of “willful unfair claims settlement practices,” “egregious delays in responding to policyholder claims in all steps,” and “unreasonable denials.” These actions have reportedly caused financial harm and distress to policyholders.
The investigation stems from consumer complaints that began accumulating in 2022, just three years after Tesla entered the insurance market. Issues included a vacant Head of Claims position for months, exacerbating delays. After six months of regulatory monitoring, problems persisted and worsened. A CDI statement noted, “In 2025, the Tesla Companies have already had more complaints, more justified complaints, and committed more violations than in the three previous years combined.”
Tesla and State National have 15 days to respond to the allegations. Each violation could result in fines of up to $10,000, potentially totaling millions. This regulatory action coincides with a class action lawsuit filed in July against Tesla for delaying claim processing, highlighting ongoing legal challenges for the electric vehicle maker's insurance arm.