Tesla’s Insurance Arm Accused Of ‘egregious Delays’ And ‘systemic Failures’ By Ca Regulator

Tesla has been deed pinch an enforcement action by California’s Department of Insurance (CDI) for routinely denying aliases delaying customer claims contempt years of warnings from nan authorities regulator, according to a caller brace of filings.

Tesla’s security arm, on pinch its partner State National Insurance Company, engaged successful “willful unfair claims colony practices” including “egregious delays successful responding to policyholder claims successful each steps” of nan process and “unreasonable denials,” CDI wrote. This has allegedly caused “financial harm” and “distress to policyholders.”

CDI first approached Tesla astir these issues successful 2022, according to nan filings, yet it claims things person only gotten worse. “In 2025, nan Tesla Companies person already had much complaints, much justified complaints, and committed much violations than successful nan 3 erstwhile years combined,” nan regulator wrote.

Tesla and State National could look penalties up to $5,000 for each “unlawful, unfair, aliases deceptive act” and up to $10,000 for each “willful” act, according to nan filings. The companies person 15 days to respond.

The enforcement action could person knock-on ineligible effects for Tesla. In July, nan institution was deed pinch a projected people action suit complete allegations that nan company purposely delayed and minimized declare payouts. CDI wrote Friday that Tesla’s actions whitethorn person created “potential third-party liability exposure.” Tesla and State National did not instantly respond to a petition for comment.

Tesla launched its in-house security merchandise successful 2019. The thought was to connection cheaper premiums and faster service. But it sewage disconnected to a rocky start. The website many times crashed, and erstwhile it didn’t, it offered quotes that were acold higher than owners expected. Still, Musk promised it would beryllium a “revolutionary” product.

Just 3 years later, according to CDI’s filings, nan regulator noticed a “marked uptick successful claims-related user complaints” against Tesla. So successful December 2022, CDI started gathering pinch Tesla and State National.

The regulator said it learned Tesla’s “Head of Claims” position had been vacant for months. It besides accused nan companies of not reporting nan claims-handling problems.

As a result, CDI subjected Tesla and State National to a benignant of probationary period: nan regulator monitored nan companies’ efforts to trim these violations for six months. Tesla and State National “conceded” that they had underestimated nan measurement of claims and nan staffing required to grip them, according to CDI, and promised to beef up hiring.

It took Tesla until April 2023 to prosecute a caller Head of Claims. Through nan remainder of that year, Tesla and State National “reported improvements successful nan quality” of their claims handling and nan “resolution of user complaints.”

Later that year, Reuters published an investigation into Tesla’s security arm that showed things weren’t truthful rosy.

CDI came to nan aforesaid realization successful 2024. The regulator noticed a “significant increase” successful some user complaints against Tesla and “violations of nan law,” according to nan filings. CDI had received conscionable 83 user complaints against Tesla successful 2022, but successful 2024, that number jumped to 829. In 775 of those cases, CDI recovered Tesla had violated nan state’s security code.

Things person only gotten worse, according to CDI. Through September 22 of this year, nan regulator has received 1,481 complaints against Tesla, and identified 1,969 security codification violations.

In total, since 2022, CDI said Tesla has accumulated astir 3,000 violations of authorities security law. The mostly of those violations impact Tesla failing to respond to customers wrong nan mandatory 15-day period. CDI said it identified 166 violations successful which Tesla revenge to behaviour a “thorough, fair, and nonsubjective investigation” into a claim.

“CDI many times notified [Tesla] of its claims-mishandling issues and violations of law,” nan regulator wrote. “While [Tesla] many times committed to improvements, nan number of justified complaints and violations continued to mount, demonstrating [Telsa’s] nonaccomplishment to correct its practices.”