California’s insurance commissioner has issued a strong warning to Tesla Insurance Services and Tesla Insurance Company, citing repeated failures in handling policyholder claims. The action highlights growing concerns about Tesla’s role in the insurance sector, where consumer complaints have steadily increased.

Commissioner Ricardo Lara’s office said it has launched enforcement actions not only against Tesla’s insurance arms but also State National Insurance Company, which underwrites Tesla policies in California. Regulators accused the companies of ignoring repeated warnings, allowing staffing shortfalls, and prioritizing profits over policyholders’ rights.

“The insurers must handle policyholder claims or face a hearing before an administrative law judge,” Lara’s office said. “They risk suspension or revocation of their licenses to operate in California, as well as significant fines.”

The companies now have 15 days to reply to the department’s accusations. Tesla did not immediately respond to requests for comment.

STORY HIGHLIGHTS

• Tesla Insurance Services, Tesla Insurance Company, and State National Insurance Company face enforcement actions.
• Regulators cite delays, denials, and failure to resolve claims.
• Staffing shortages admitted by Tesla and State National.
• Three heads of claims cycled between April 2023 and May 2025.
• Documented violations: 396 failures to respond within 15 days, 22 failures to resolve claims within 40 days, 10 unreasonable inspection/travel demands.
• Potential fines: $5,000 per violation, $10,000 for willful violations.
• Policyholders advised to contact 800-927-4357 or www.insurance.ca.gov.

According to the department’s filing, complaints against Tesla-linked policies began rising as early as August 2022. Consumers described difficulties reaching representatives to submit claims, long delays in follow-up, and frustration in obtaining resolutions.

Regulators held meetings with Tesla Insurance and State National through 2023. At the time, both admitted they had underestimated claim volumes and lacked adequate staffing. They promised corrective action.

But by 2024, complaints rose again. The department noted that Tesla Insurance had seen at least three different heads of claims in a two-year span, signaling instability at the leadership level.

The enforcement filing documented a wide range of violations between July 31, 2024, and September 22, 2025. These included failures to respond to consumer inquiries within required deadlines, delays in accepting or denying claims, and unreasonable demands on claimants, such as long travel for inspections or extended waits for repairs.

Lara’s office also accused Tesla Insurance and State National of unreasonable denials of claims, delays in payments, and incomplete investigations, which left customers without the benefits they were owed. The companies further failed to notify policyholders that they had the right to request a state review of denials — an important safeguard for accountability.

“Tesla has racked up more complaints, justified complaints, and violations in 2025 than in the prior three years combined,” the commissioner’s office said in its statement.

Under California law, insurers face fines of up to $5,000 per unlawful act and $10,000 for willful acts. The department emphasized that this case is a clear example of how regulators escalate from consumer complaints to formal legal action when companies fail to comply.

Policyholders past and present with Tesla Insurance or State National are being urged to contact the Department of Insurance if they believe their rights were violated.

This latest action places Tesla under heightened scrutiny in California, not for its vehicles this time, but for its insurance business. With regulators pressing hard, the next 15 days could determine whether Tesla maintains its insurance foothold in the state or faces serious penalties that may reshape its operations.

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