Tesla's insurance arm accused of 'egregious delays' and 'systemic failures' by CA regulator | TechCrunch
Key Takeaways
- California's CDI initiated enforcement action against Tesla Insurance and State National for "willful unfair claims settlement practices."
- The violations include egregious delays in responding to and unreasonable denials of customer claims, causing policyholder distress.
- CDI warnings began in 2022, but the regulator states that violations have worsened, with 2025 already surpassing the previous three years combined in justified complaints.
- Tesla and its partner face potential penalties up to $10,000 per willful violation, and the action may create third-party liability exposure.
- The majority of the nearly 3,000 accumulated violations involve Tesla failing to respond to customers within the mandatory 15-day period.
Californiaâs Department of Insurance (CDI) has filed an enforcement action against Teslaâs insurance division and its partner, State National Insurance Company, for persistently engaging in unfair claims settlement practices, such as unreasonable denials and significant delays in responding to policyholders. The CDI first warned Tesla about these issues in 2022, but filings indicate that violations have escalated dramatically, with 2025 already seeing more justified complaints than the prior three years combined. These alleged actions have reportedly caused financial harm and distress to policyholders, and the companies face substantial financial penalties for each violation. The enforcement action follows a proposed class action lawsuit in July alleging similar claim payout delays and minimization. Despite promises of cheaper, faster service when launching in 2019, Tesla's insurance product faced early technical issues and a subsequent "marked uptick in claims-related consumer complaints" by 2022. Although Tesla hired a new Head of Claims in 2023 and initially reported improvements, a 2024 CDI review and a Reuters investigation revealed that complaints and violations surged, accumulating nearly 3,000 violations of state insurance law since 2022, primarily for failing to respond to customers within the mandatory 15-day window.
