Tesla’s Insurance Arm Accused of ‘Egregious Delays’ and ‘Systemic Failures’ by CA Regulator
Tesla’s insurance arm is under fire as California regulators accuse the company of “egregious delays” and “systemic failures” in handling customer claims. The California Department of Insurance (CDI) filed enforcement actions alleging that Tesla routinely denied or delayed claims, even after years of warnings.
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According to CDI, Tesla and its partner, State National Insurance Company, engaged in willful unfair claims settlement practices, including unreasonable claim denials and delays at every stage. These actions reportedly caused financial harm and stress to policyholders.
Longstanding Complaints Against Tesla Insurance
The filings reveal that CDI first warned Tesla about these issues in 2022. However, the regulator says conditions have worsened. In 2025 alone, Tesla allegedly faced more complaints and violations than the previous three years combined.
Tesla and State National could face fines of up to $5,000 for each unfair act and up to $10,000 for willful violations. The companies have 15 days to respond to the enforcement action.
Legal Risks and Consumer Backlash
The enforcement action may have broader legal consequences. In July, Tesla faced a proposed class-action lawsuit over claims that it intentionally delayed or minimized payouts. CDI noted that Tesla’s handling of insurance claims could lead to potential third-party liability exposure.
Tesla and State National have not commented publicly on the latest filings.
A Rocky Road for Tesla Insurance
Tesla launched its insurance product in 2019, promising cheaper premiums and faster service. However, early users experienced website crashes and unexpectedly high quotes. Despite Elon Musk’s promise of a “revolutionary” product, consumer complaints quickly mounted.
By December 2022, CDI had identified a marked increase in claims-related complaints and began engaging with Tesla to address the issues. Yet, according to the regulator, the problems persist, highlighting ongoing systemic failures in Tesla’s insurance operations.
What This Means for Policyholders
Policyholders may face longer waits for claim resolutions and potentially lower payouts. The enforcement action underscores the need for greater oversight and accountability within Tesla’s insurance business. Consumers should remain vigilant and report any delays or unfair treatment to regulators.
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