According to the new submission, Tesla has been subject to enforcement action by the California Department of Insurance (CDI) to routinely deny or delay customer claims despite years of warnings from state regulators.
Tesla’s insurance division, along with its partner state national insurance companies, engaged in “willful, unfair claims settlement practices” that included “significant delays to policyholder claims at every step” and “irrational denials” of the process. This is said to have caused “financial harm” and “pain for policyholders.”
According to the filing, CDI first approached Tesla on these issues in 2022, but claims that things just got worse. “In 2025, Tesla companies have already received more complaints, more legitimate complaints, and have committed more violations than they combined over the past three years,” the regulator wrote.
Tesla and the State National could face fines of up to $5,000 and up to $10,000 for each “illegal, unfair or deceptive conduct,” according to filings. Companies have a 15-day service.
Enforcement actions could have knock-on legal consequences for Tesla. In July, the company was hit by a proposed class action lawsuit over allegations that the company intentionally delayed and minimized payments to its claims. CDI wrote Friday that Tesla’s actions may have created “potential third-party liability exposure.” Tesla and the State National did not immediately respond to requests for comment.
Tesla launched an in-house insurance product in 2019. The idea was to provide cheaper premiums and faster service. But it was a rocky start. The website crashed repeatedly, but otherwise provided much higher quotations than the owner expected. Still, Musk promised it would be a “innovative” product.
Just three years later, regulators noticed a “significant rise in claims-related consumer complaints” against Tesla, according to a CDI filing. So, in December 2022, CDI began meeting Tesla with the state national.
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Regulators said they learned that Tesla’s “responsibility for claims” position has been vacant for months. He also accused the company of not reporting claim processing issues.
As a result, CDI exposed Tesla and State National to a kind of probation period. Regulators monitored businesses’ efforts to reduce these violations for six months. According to the CDI, Tesla and the state states “accepted” that they did not underestimate the amount of claims and the staffing needed to handle them, and committed to strengthening employment.
Until April 2023, Tesla was needed to hire a new claims manager. Throughout the remainder of the year, Tesla and state states have “reported improvements in quality” of their claims and “resolving consumer complaints.”
Later that year, Reuters released a survey of Tesla’s insurance division.
According to the filing, CDI was the same in 2024. Regulators have noticed a “significant increase” in both consumer complaints and “violation of the law.” CDI received only 83 consumer complaints against Tesla in 2022, but in 2024 the number jumped to 829. In 775 of these cases, CDI found Tesla was in violation of the state’s insurance laws.
According to the CDI, things just got worse. Until September 22 this year, regulators received 1,481 complaints against Tesla and identified 1,969 insurance law violations.
In total, since 2022, CDI said Tesla has accumulated around 3,000 violations of the state insurance law. Most of these violations include Tesla, which failed to respond to customers within the required 15-day period. CDI said it has identified 166 violations Tesla has submitted to make a “full, fair and objective investigation” claim.
“CDI repeatedly notifies (Tesla) of false issues in its claims and violations of the law,” the regulator wrote. “Although (Tesla) has repeatedly committed to improvements, the number of legitimate complaints and violations continues to increase, indicating that it cannot correct practices.”
