California Warns of Possible Closure of Tesla's Insurance Due to Numerous Complaints | Carscoops

      State officials claim that Tesla consistently postponed claims, refused payouts, and disregarded regulators' alerts.

      

      California alleges that Tesla Insurance is systematically violating claims handling regulations.

      Complaints surged from 21 in 2022 to almost 2,000 by September 2025.

      Tesla and its affiliates could face license suspension and fines of $10,000 per violation.

      Tesla, known as an automaker, is also involved in other sectors, including insurance, which it aims to be the best in for its customers. However, California authorities assert that it’s not only falling short of this promise but is performing poorly enough that it risks losing its insurance license entirely.

      On October 3, the California Department of Insurance (CDI) announced that it is initiating enforcement actions against Tesla Insurance Services, Inc. and Tesla Insurance Company, as well as State National Insurance Company, which provides underwriting for Tesla’s policies in the state.

      Regulators allege that the three entities repeatedly failed to adhere to California's claims handling regulations, claiming they have caused “significant harm” to Tesla policyholders.

      In simple terms, Tesla Insurance Services functions as the policy broker, while Tesla Insurance Company and State National manage the underwriting and claims processes.

      A History of Misconduct

      The CDI claims that the companies have established a pattern of misconduct so serious that the state may revoke or suspend their licenses and impose fines up to $10,000 for each intentional violation.

      The department's allegations against Tesla include significant delays in processing valid claims, unreasonable rejections, and inadequate investigations that lack thoroughness, fairness, and objectivity.

      Additionally, the department accuses Tesla of not informing policyholders of their right to appeal claims denials to the state.

      Rising Complaints

      This situation is not a recent development for the state either. In 2022, there were 21 validated complaints against State National Insurance Company, leading to 40 regulatory violations.

      The following year, those numbers increased to 63 complaints and 195 violations. In 2024, Tesla Insurance Services became involved, resulting in complaints escalating to 291, along with 835 violations.

      Thus far in 2025, the department reports nearly 2,000 complaints, with over 500 being justified, and more than 2,000 regulatory violations logged. Tesla Insurance Services, Tesla Insurance Company, and State National now have 15 days to address the allegations before a possible administrative hearing.

      If the department is successful, the companies could be prohibited from conducting insurance business in California and face substantial fines.