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California Moves Against Tesla Insurance Over Thousands of Policyholder Complaints

EV-maker’s insurance arm could lose permission to sell policies in the state that buys the most Teslas.

Evelyn Pimplaskar
Evelyn PimplaskarEditor-in-Chief, Director of Content
  • 10+ years in insurance and personal finance content

  • 30+ years in media, PR, and content creation

Evelyn leads Insurify’s content team. She’s passionate about creating empowering content to help people transform their financial lives and make sound insurance-buying decisions.

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Chris Schafer
Edited byChris Schafer
Chris Schafer
Chris SchaferDeputy Managing Editor, News and Marketing Content
  • 15+ years in content creation

  • 7+ years in business and financial services content

Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.

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John Leach
Reviewed byJohn Leach
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John LeachSenior Insurance Copy Editor
  • Licensed property and casualty insurance agent

  • 8+ years editing experience

  • NPN: 20461358

John leads Insurify’s copy desk, helping ensure the accuracy and readability of Insurify’s content. He’s a licensed agent specializing in home and car insurance topics.

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Published | Reading time: 2 minutes

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California regulators have threatened to revoke Tesla Insurance’s license to sell auto coverage in the state following thousands of customer complaints about the company’s claims handling.

In a strongly worded press release, the California Department of Insurance (CDI) charged that Tesla Insurance and its underwriter, State National Insurance Company, failed to address repeated warnings from regulators.

“Instead,” the CDI alleged, the companies “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.”

Since 2022, the CDI’s claims services bureau (CSB) has received 2,460 complaints from Tesla Insurance policyholders, many of them Tesla owners. Following investigations into the complaints, the CSB found that the insurers violated state insurance regulations 2,568 times.

Tesla and State National have 15 days to respond to the CDI’s Oct. 3 notice of enforcement action.

Claims mishandling at the heart of regulators’ action

In its enforcement notice, the CDI cited a laundry list of violations stemming from customer complaints. The alleged violations included failing to respond to policyholder inquiries, provide written updates, pay claims, and deny or accept a claim within legally required time frames.

The CDI also noted more than 150 instances when Tesla or State National failed to investigate claims thoroughly, fairly, and objectively. In some cases, the insurers required policyholders who filed a claim to “travel an unreasonable distance or wait an unreasonable period of time” to inspect damaged vehicles, get repair estimates, inspect a replacement vehicle, or get a vehicle repaired at a specific facility.

In one case, the insurer failed to pay for completed work within 10 days of receiving an itemized bill or invoice, the CDI said.

What’s next? More trouble for Tesla Insurance

Tesla and State National’s “incompetency, untrustworthiness, and misconduct … constitute grounds for the Insurance Commissioner to suspend or revoke their licenses,” the CDI said in its announcement of the enforcement action.

Additionally, both insurers could face fines ranging from $5,000 to $10,000 for each violation — potentially adding up to $12.8 million to $25.6 million.

Californians buy the most Teslas of any state, according to the World Population Review. Tesla accounted for approximately 53% of California’s electric and hybrid vehicles market in 2024, down 7.6% from the year before, according to a California New Car Dealers Association analysis of Experian Automotive data.

In July, a group of Tesla Insurance policyholders filed a class action lawsuit against the insurer. The suit alleges that Tesla delayed, failed to investigate, and failed to process and settle damage claims.

Evelyn Pimplaskar
Evelyn PimplaskarEditor-in-Chief, Director of Content

Evelyn Pimplaskar is Insurify’s director of content. With 30-plus years in content creation – including 10 years specializing in personal finance – Evelyn’s done everything from covering volatile local elections as a beat reporter to building fintech content libraries from the ground up.

Before joining Insurify, she was editor-in-chief at Credible, where she launched and developed the lending marketplace’s media partnership’s content initiative and managed the restructuring of the editorial team to enhance content production efficiency. Formerly, as tax editor for Credit Karma, Evelyn built a library of more than 300 educational articles on federal and state taxes, achieving triple-digit year-over-year growth in e-files from organic search.

Her early career included work as a content marketer, vice president and managing officer of a boutique public relations agency, chief copy editor for 14 weekly Forbes publications, reporting for large and mid-sized daily newspapers, and freelancing for the Associated Press.

Evelyn is passionate about creating personal finance content that distills complex topics into relatable, easy-to-understand stories. She believes great content helps empower readers with the information they need to make important personal finance decisions.

Chris Schafer
Edited byChris SchaferDeputy Managing Editor, News and Marketing Content
Chris Schafer
Chris SchaferDeputy Managing Editor, News and Marketing Content
  • 15+ years in content creation

  • 7+ years in business and financial services content

Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.

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John Leach
Reviewed byJohn LeachSenior Insurance Copy Editor
Photo of an Insurify author
John LeachSenior Insurance Copy Editor
  • Licensed property and casualty insurance agent

  • 8+ years editing experience

  • NPN: 20461358

John leads Insurify’s copy desk, helping ensure the accuracy and readability of Insurify’s content. He’s a licensed agent specializing in home and car insurance topics.

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