Tesla's insurance arm accused of ‘egregious delays' and ‘systemic failures' by CA regulator

Core Viewpoint - Tesla's insurance arm is facing enforcement action from California's Department of Insurance (CDI) for consistently denying or delaying customer claims, despite prior warnings from the regulator [1][2]. Group 1: Enforcement Action Details - CDI has accused Tesla and its partner, State National Insurance Company, of engaging in "willful unfair claims settlement practices," which include significant delays and unreasonable denials of claims [2]. - The regulator noted a dramatic increase in complaints against Tesla, with 2025 already seeing more justified complaints and violations than the previous three years combined [2]. - Tesla and State National could face penalties of up to $5,000 for each unlawful act and up to $10,000 for each willful act, with a 15-day window to respond to the enforcement action [3]. Group 2: Historical Context and Complaints - Tesla launched its in-house insurance product in 2019, aiming to provide cheaper premiums and faster service, but faced initial challenges such as website crashes and unexpectedly high quotes [5]. - By 2022, CDI observed a marked increase in claims-related consumer complaints, prompting meetings with Tesla and State National to address these issues [6]. - In 2024, complaints against Tesla surged to 829, with 775 cases resulting in identified violations of the state's insurance code [11]. Group 3: Current Situation and Violations - As of September 22, 2023, CDI has received 1,481 complaints against Tesla, identifying 1,969 violations of insurance code [12]. - Since 2022, Tesla has accumulated nearly 3,000 violations, primarily for failing to respond to customers within the required 15-day period [13]. - Despite repeated notifications from CDI regarding claims mishandling, Tesla's justified complaints and violations have continued to increase, indicating a failure to rectify practices [14].