Back in 2019, Tesla introduced its auto insurance options to customers in California, but it now faces the possibility of losing this authorization. The California Department of Insurance (CDI) has initiated enforcement actions against Tesla Insurance, which operates as an agent for State National Insurance Company, also named in the legal notice. The warning issued states that Tesla Insurance and State National exhibited “repeated failures to adhere to established claims handling regulations.” Furthermore, the agency has labeled their claims response as plagued by “egregious delays” and insufficient investigations.
The CDI’s findings indicated that in 2022, it received 97 complaints related to State National, of which 21 were deemed valid. The situation worsened over time, culminating in 1,095 complaints reported for State National between January 1, 2025, and September 22, 2025, with 415 confirmed as justified. During this same period, State National was found to have committed 1,498 violations of California’s insurance regulations.
As for Tesla Insurance itself, the CDI tallied 842 complaints, with 166 considered justified. Additionally, it cited 532 violations linked to Tesla Insurance. The department highlighted issues including an extended vacancy in the Head of Claims role and high turnover within the position between April 2023 and May 2025.
Following the legal filing on Friday, Tesla Insurance and State National have a timeframe of 15 days to respond to the CDI’s findings. Should the two providers fail to address the concerns highlighted in the complaint, they will be required to appear before a judge who will determine their ability to continue providing insurance coverage in California. In addition, they could face “monetary penalties reaching up to $5,000 for each instance of unlawful, unfair, or deceptive conduct, or $10,000 for every occurrence classified as willful.”
