Tesla’s insurance division is under increasing scrutiny from California’s Department of Insurance (CDI) after accumulating nearly 3,000 violations of state insurance law since 2022. The chilling discoveries expose shocking patterns of systemic failures behind the processing of claims. Consequently, complaints from consumers and claims of non-timely payouts have ballooned.
CDI has already taken in 1,481 complaints about Tesla as of Sept. 22, 2025. This is a huge jump from the past several years. Alarmingly, the number of justified complaints and violations registered this year has already surpassed those documented in each of the last three years. Putting all of these worries together, the regulator found 1,969 particularly harmful violations stemming from Tesla’s billing practices in the insurance space.
Additionally, Tesla’s “Head of Claims” position has remained vacant for several months, raising further questions about the company’s ability to manage claims effectively. As we explained in last March’s complaint, this vacancy has sadly overlapped with a notable spike in claims-related consumer complaints against the company.
Tesla’s racial animus is now the subject of a proposed class action lawsuit. According to Cedillo’s complaint, the company routinely used delay and denial as claims management tactics. The lawsuit adds to the pressure on Tesla’s nascent insurance operations. In addition to Exxon, many other operations—largely dark money operations—are still being scrutinized, including by outlets such as Reuters. Even overcoming these hurdles, Tesla and State National have highlighted increased efficiencies in claims handling.
The CDI started conversations with Tesla and State National back in December of 2022 to help answer these urgent questions. The regulator emphasized that despite Tesla’s repeated commitments to improving its practices, “the number of justified complaints and violations continued to mount, demonstrating [Tesla’s] failure to correct its practices.”
Elon Musk used to call Tesla’s insurance product “revolutionary,” but the recent Tesla insurance experience illustrates a far bleaker picture. Reiterating the task of the California regulator, she stated the harmful delays in settling policyholder claims at each step. This points to a glaring need for reform inside Tesla’s insurance division.
That scrutiny extends beyond consumer complaints. It underscores an even bigger problem in the insurance industry with how insurance companies are treating and paying their customers. Whatever the outcome, Tesla and State National now have 15 days to answer the regulator’s complaint.
