Tesla decided to get into the insurance game back in 2019, and what do you know, after a few years, reports emerged claiming Tesla’s in-house insurance was hot garbage. Apparently it never improved, either, and it’s now reached the point that the California Department of Insurance is threatening to revoke its license to operate in the state. According to the press release issued by CDI, Tesla Insurance (working with State National Insurance Company, which is also named in the notice) has “repeatedly failed in their legal obligations to adequately handle hundreds of California automobile policyholder claims.”
CDI also alleges that Tesla Insurance was “repeatedly warned by the Department of Insurance” that it was violating California law but “instead chose to abandon their responsibility to consumers and persist with their non-compliant claims-handling practices, placing profits above people and flouting the law with impunity.” So what did Tesla’s insurance division do that was so egregious that CDI felt the need to step it? Well, it’s simple, really:
The Department’s accusations are based on the companies’ ongoing systemic failures and willful unfair claims settlement practices including, but not limited to, the following alleged violations:
- Egregious delays in responding to policyholder claims in all steps of the claims handling process, causing financial harm, out-of-pocket expenses, potential third-party liability exposure, and distress to policyholders
- Unreasonable denials and delays in fully paying valid claims to consumers
- Failure to conduct thorough, fair, and objective investigations of claims, thus denying consumers the insurance benefits they expect
- Failure to advise policyholders of their rights to have their claims denials reviewed by the Department – a major consumer protection in California to make sure insurers are held accountable by their regulator
It hasn’t been getting any better, either, with CDI also pointing out, “In 2025, the Tesla Companies have already had more complaints, more justified complaints, and committed more violations than in the three previous years combined.”
More violations every year
Tesla Insurance is an appointed agent for State National, and as Engadget points out, between the two companies, the last several years have involved a slew of complaints and alleged violations. In 2022, CDI found 21 complaints against State National were justified, while also finding that it violated state insurance regulations 40 times. Through September 22 of this year, though, those two figures are up to 415 justified complaints and 1,498 insurance code violations. Meanwhile, in 2025, Tesla Insurance has seen an alleged 166 valid claims and 532 violations.
While it sounds like CDI is pretty fed up with Tesla’s insurance program and is simply jumping through the final legally-required hoop before bringing down the banhammer, Tesla Insurance does still have time to make things right. CDI is giving Tesla 15 days to resolve these issues “in favor of policyholders,” and if it doesn’t, its lawyers will be hauled before a judge “to determine whether they will be able to maintain their ability to transact insurance business in California as well as face significant monetary penalties.”
Though Elon has plenty of money to burn, the penalties for failing to make things right can add up quickly. In California, we’re talking “up to $5,000 for each unlawful, unfair, or deceptive act, or up to $10,000 for each such act determined to be willful.” And with CDI making statements such as, “Today’s ‘Accusations’ and ‘Notices of Orders to Show Cause’ allege that the incompetency, untrustworthiness, and misconduct of these companies constitute grounds for the Insurance Commissioner to suspend or revoke their licenses and that it would be against the public interest to continue to allow these companies to continue transacting insurance in the State of California,” expect them to go for the jugular, assuming this case makes it to court.
If you have Tesla insurance and believe you were treated unfairly, too, there’s still time to log your complaint. Either call 800-927-4357 or file your complaint online with CDI.
