California may suspend Tesla's insurance operations due to numerous customer complaints (3 photos)

Tesla Insurance Issues

Tesla is an automaker that operates in several industries, including insurance. The company has long promised that its insurance services will be the best for customers. However, according to California authorities, the situation is very different: Tesla's insurance is so bad that the company could lose its license to provide services in this state altogether.

Regulatory Actions

On October 3, the California Department of Insurance announced enforcement actions against Tesla Insurance Services, Inc. and Tesla Insurance Company, as well as State National Insurance Company, which insures Tesla policies in the state. Regulators allege that the three companies repeatedly violated California’s claims handling laws, causing significant harm to Tesla drivers who had policies with them.

The companies’ roles in the system

Tesla Insurance Services acts as a broker that sells policies, while Tesla Insurance Company and State National handle underwriting and claims processing. Together, the department says, they created a system of violations so serious that the state can suspend or revoke their licenses and impose fines of up to $10,000 for each willful violation.

Nature of the violations

Among the allegations are significant delays in paying out valid claims, unreasonable denials, and a failure to conduct “thorough, fair, and objective investigations.” The department also accuses Tesla of failing to notify policyholders of their right to have the state review the denials.



Complaints on the Rise

The problem is not new to the state. In 2022, there were 21 substantiated complaints against State National Insurance Company, resulting in 40 regulatory violations. The following year, those numbers rose to 63 complaints and 195 violations. In 2024, Tesla Insurance Services joined them, bringing the total number of complaints to 291 and violations to 835.

Current Status

As of 2025, the department had received nearly 2,000 complaints, more than 500 of which were found to be substantiated, with more than 2,000 regulatory violations. Tesla Insurance Services, Tesla Insurance Company, and State National now have 15 days to respond to the allegations before they face an administrative hearing. If the department prevails, the companies could be disqualified from doing insurance business in California and face significant fines.



This situation highlights the importance of insurance companies complying with legal requirements, especially when it comes to resolving customer claims quickly and fairly. For Tesla, which positions itself as an innovative company, this could be a serious reputational blow if the situation is not quickly rectified. It could also affect consumer confidence in electric vehicle insurance in general, as many drivers rely on specialized policies to protect their investments.