auto dealer in black and red logo
MenuMENU
SearchSEARCH

Tesla Accused of Insurance Misconduct

California’s insurance regulator says EV maker’s insurance arm made claims process burdensome for consumers.

October 17, 2025
Tesla Accused of Insurance Misconduct

Tesla, founded in the Golden State, offers auto insurance to its customers there and about a dozen other states, including for non-Tesla vehicles of Tesla owners. 

Credit:

Pixabay/Blomst

2 min to read


Tesla has gotten on the wrong side of California regulators for the insurance service it provides to customers.

The California Department of Insurance took enforcement action against the Texas-based electric-vehicle maker after it said it received thousands of complaints over Tesla's claims process.

The department said the automaker’s insurance entities “repeatedly failed in their legal obligations to adequately handle hundreds of California automobile policyholder claims.”

Tesla, founded in the Golden State, offers auto insurance to its customers there and in about a dozen other states, including for non-Tesla vehicles of Tesla owners. Billed on its website as "insurance you control," its premiums are based on how people drive the cars as monitored by in-vehicle telematics. Claims are made via Tesla’s application.

The insurance department alleges that Tesla insurance conducted noncompliant claims practices, “placing profits above people and flouting the law with impunity,” according to a press release.

“Unless these issues are resolved in favor of policyholders beforehand, the companies will be ordered to a hearing before an administrative law judge to determine whether they will be able to maintain their ability to transact insurance business in California as well as face significant monetary penalties.”

The department says it started receiving consumer complaints in 2022, including delays in responding to claims; “unreasonable” denials and delays in paying claims; failure to conduct “thorough, fair and objective” claim investigations; and failure to communicate to policy holders their rights to have the department review claim denials.

The department said it warned the Tesla insurance companies to make changes, but it says complaints only increased. Penalties for violations could amount to $5,000 to $10,000 each, according to the department.

LEARN MORE: Number of Uninsured Drivers Up

More Industry

man buckling seatbelt in car with gray interior
Awardsby Lauren LawrenceSeptember 3, 2026

Two New Rides Earn Safety Awards

Thanks to vehicle redesigns, two more vehicles have earned IIHS’ Top Safety Pick+ award that builds on the criteria of the lower Top Safety Pick award.

Read More →
Photo of phone on a surface next to a window
IndustrySeptember 1, 2026

How A Simple Phone Call Can Cause a Dealership Data Breach

Despite the sophisticated techniques fraudsters often employ today to gain access to dealerships’ valuable information, they sometimes use a somewhat old-fashioned approach.

Read More →
front of car dealership Acura of Rio Grande
Industryby Lauren LawrenceAugust 28, 2026

Texas Rooftop Gets New Owner, Name

Family-owned Lumos Auto Group acquired Acura of the Rio Grande Valley from Bill Bird and will operate the dealership as Lumos Acura.

Read More →
Ad Loading...
Businessman in a suit speaking on stage at an event with '2026 CEO Investor Day' displayed in background
Industryby Hannah MitchellAugust 28, 2026

Hyundai Feeling Electric

As the automaker looks to the balance of the decade, it plans to significantly boost its electrified powertrain lineup, including more hybrids and its first extended-range EVs.

Read More →
Auto Dealer Today, Dealer Debrief, 08/26/2026 with Lauren Lawrence
Industryby Lauren LawrenceAugust 26, 2026

Dealer Debrief: Luxury Brands are Losing Ground

The quality gap between luxury and mass-market auto brands is narrowing. Today, Lauren is discussing why.

Read More →
Red Honda Civic hybrid sedan on two lane road with green hills in background
Industryby Hannah MitchellAugust 21, 2026

August Auto Sales a Mixed Bag

An early forecast shows strong business despite consumer hurdles, and hybrids are a big piece of their affordability coping strategy.

Read More →
Ad Loading...
Six men standing in front of a Ford dealership.
Industryby Hannah MitchellAugust 14, 2026

Longtime Ford Store Changes Hands

The Virginia dealership joins a small area automotive group in a one-dealership transaction, moving from one family franchisee to another.

Read More →
car in background with hand giving a thumbs up in front
Industryby Lauren LawrenceAugust 14, 2026

Auto Loan Delinquency Rates Stabilize

Auto loans are a main driver of nonmortgage consumer debt, but delinquency rates stabilized in the second quarter across all credit risk tiers.

Read More →
Arm of mechanice reaching for car with hood open
Industryby StaffAugust 13, 2026

ASE Seeks Accurate Technician Pay, Benefits Data

New free membership trial removes cost barrier for dealerships and shops willing to contribute anonymous information to the industry data exchange.

Read More →
Ad Loading...
Photo of Dodge Durango moving down a road in sunlight
Industryby Hannah MitchellAugust 7, 2026

No Longer Worth the Price?

Mass-market auto brands are gaining ground on luxury competitors with what used to be premium features, helped along by the pressure of high vehicle prices dogging budget-conscious shoppers.

Read More →