Tesla Insurance under investigation for unfair practices and delayed payouts, says California watchdog

Tesla’s insurance venture is under fire for alleged infractions. According to the California Department of Insurance (CDI), the business has accumulated approximately 3,000 regulatory code violations since its inception in 2019.

CDI has accused Tesla and partner State National Insurance Company of “willful unfair claims settlement practices,” “egregious delays in responding to policyholder claims in all steps,” and “unreasonable denials.” The watchdog concluded that Tesla has financially harmed its policyholders.

CDI could impose fines of up to $10,000 for each infraction, meaning the automaker could be looking at millions in penalties. Tesla and State National have 15 days to respond to CID.

Trouble started just three years after Tesla started offering insurance services. CID contacted Tesla in 2022 after consumer complaints related to claims started to accumulate against the company. Issues identified by the CID included the position of Head of Claims being vacant for months. Fast-forward three years, including a six-month stint of regulatory monitoring, and things have gone even worse.

According to , “In 2025, the Tesla Companies have already had more complaints, more justified complaints, and committed more violations than in the three previous years combined.”

The repercussions of CDI’s allegations could spill into the legal arena for Tesla. Taking notes of proceedings will be the customers behind the class action lawsuit brought against the EV maker for delaying claim processing in July.