Tesla's insurance division is facing a crisis as the California state agency accused the company of serious delays and system errors in handling customer complaints.
According to the newly released records, the California Department of Insurance (CDI) has taken enforcement action against Tesla and its partner State National Insurance Company.
The two companies are said to have engaged in unfair complaint handling activities, including delaying feedback at all steps and making unreasonable denials, causing financial and mental losses to customers.
CDI said it first contacted Tesla in 2022, but the situation has worsened.
In 2025, Tesla companies will receive more complaints, more legitimation and more violations than the previous three years combined, the agency stressed.
Tesla and State National could face up to $5,000 in fines for each violation and $10,000 if determined to be intentional.
The problem with Tesla Insurance is not new. Launched in 2019 with the promise of providing cheaper fees and fast services, this product soon encountered difficulties such as website frequent problems, and prices not as expected.
CEO Elon Musk has repeatedly affirmed that this will be a "revolutionary" service, but the data shows the opposite.
According to the records, in 2022, CDI only received 83 complaints related to Tesla insurance. By 2024, the number had skyrocketed to 829, of which 775 cases were identified as violating state insurance laws.
As of September 2025, the number of complaints has increased to 1,481 with nearly 2,000 violations. In total, Tesla has accumulated nearly 3,000 violations since 2022, mostly due to not responding to customers within 15 days.
In April 2023, Tesla appointed a new Chief of Complaints. Although there were reports of improvement in 2023, the situation continued to deteriorate afterwards. An independent Reuters investigation in late 2023 also concluded that Tesla's insurance division had many problems.
In addition to legal risks from CDI, Tesla also faces a class action lawsuit in July 2025, in which customers accused the company of deliberately delaying and minimizing compensation payments.
CDI warned that Tesla's actions could create a potential risk of third-party legal liability.
Tesla and State National have yet to make an official response to media requests for comment.
With the number of complaints continuing to increase and fines piling up, the insurance department, which was once promoted as a revolution, is becoming a major legal burden for Tesla.
