The department is citing the company for "egregious delays in responding to policyholder claims." (Credit: Diego M. Radzinschi/ALM)
California’s Department of Insurance has announced enforcement actions against Tesla’s insurance arm and could revoke its insurance licenses in the state.
In a statement, the CDI said Tesla Insurance Services, Tesla Insurance Company and State National Insurance Company have “repeatedly failed in their legal obligations to adequately handle hundreds of California automobile policyholder claims.” Tesla Insurance Services is an appointed agent for State National, an admitted insurer in California.
The actions could result in monetary penalties, the suspension of the insurance companies’ certificates of authority to transact insurance business in California, and possibly the suspension or revocation of Tesla Insurance Services’ licenses.
The department said it has been receiving complaints from the companies’ customers, largely Tesla drivers, since 2022. The complaints have surrounded what the department is calling “egregious delays in responding to policyholder claims in all steps of the claims handling process.”
The CDI said there have also been complaints about denials and delays in fully paying valid claims, failure to conduct thorough and fair investigations of claims and failure to advise policyholders of their right to have their claim denials reviewed by the department.
“Throughout numerous meetings with, correspondence between and reports to the Department of Insurance, the companies repeatedly committed to improvements, but the number of justified consumer complaints continued to mount,” the CDI said in a statement.
According to the department’s filings, Tesla initially blamed claims handling issues on inadequate staffing and higher-than-expected claims volume. The companies committed to increasing staffing, but complaints have continued to rise.
“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 CDI said in the document.
From 2022 to 2025, the CDI documented more than 2,900 code violations for the Tesla Insurance Services, more than 2,500 for State National and 561 for Tesla Insurance Company. Most of the violations are regarding failure to respond to claimant inquiries within 15 days.
The companies could see monetary penalties of up to $5,000 for each unlawful, unfair or deceptive act, and $10,000 for each such act determined to be willful. The companies’ ability to do insurance business in the state is also on the line.
The companies have 15 days to respond to the CDI’s notices. Unless the issues are resolved in favor of affected policyholders beforehand, the companies will have to appear before an administrative law judge to determine the extent of the monetary penalties and whether they will be able to keep their licenses.
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