Tesla launched its own auto insurance options for California customers back in 2019, but it may soon lose its authorization to do just that. The California Department of Insurance (CDI) issued enforcement actions against Tesla Insurance, which acts as an agent for State National Insurance Company and is also named in the legal notice. The issued warning claims that Tesla Insurance and State National saw "repeated failures to comply with long-standing claims handling laws." The agency also accused Tesla Insurance of "egregious delays" when responding to its customers' claims and not conducting "thorough, fair and objective investigations of claims."
According to the filing, the CDI received 97 complaints about State National in 2022 and determined that 21 were justified, while also noting that the insurance provider committed 40 violations of the state's insurance regulations. The numbers skyrocketed over the years, eventually hitting 1,095 received complaints about State National, which were boiled down to 415 justified complaints between January 1, 2025 and September 22, 2025. Within this year's complaints so far, the CDI said that State National committed 1,498 violations of the state's insurance code.
As for Tesla Insurance, the CDI received 842 complaints and said that 166 of which were justified in the same time period. The agency also accused Tesla of committing 532 violations. On top of the violations, the state agency claimed that Tesla Insurance's Head of Claims position was left vacant for several months, and when eventually filled, saw frequent turnover between April 2023 and May 2025.
After the filing on Friday, Tesla Insurance and State National have 15 days to respond to the CDI. If the two insurance providers don't resolve the issues laid out in the complaint, they will be put in front of a judge who will determine if they can continue offering insurance in the state. Along with the potential regulatory consequences, Tesla Insurance and State National will face "monetary penalties up to $5,000 for each unlawful, unfair, or deceptive act, or up to $10,000 for each such act determined to be willful."
This article originally appeared on Engadget at https://www.engadget.com/transportation/evs/california-regulators-threaten-to-revoke-teslas-insurance-license-for-mishandling-claims-180942929.html?src=rss
