California regulators say Tesla Insurance and State National could soon lose their ability to operate. The Department of Insurance claims both outfits ran unfair claims practices at scale and ignored multiple warnings.
Orders filed accuse them of systemic failures – not sloppy errors, but repeated violations that went on for years.
The agency filed two orders on Oct. 3, one aimed at Tesla Insurance Services, the managing general agent, and another at State National plus Tesla Insurance Co.
A hearing date lands within 30 days. The companies get 15 days to answer.
If they fail, Commissioner Ricardo Lara may suspend certificates of authority for up to a year and fine them – $5,000 for each inadvertent offense, $10,000 for each willful act. According to our analysts, the math could run into the tens of mn.
CDI investigators point to a surge in complaints around Tesla’s personal auto policies that started in August 2022. Policyholders reported trouble filing, getting updates, or closing out claims.
By the regulator’s count, State National racked up 2,568 separate violations from Jan. 2022 through Sept. 2025. The majority stemmed from missed 15-day response deadlines.
On top of that: 166 failures to issue 30-day written claim updates, 161 lapses in setting standards for processing, 153 botched investigations, plus dozens of other gaps.
Tesla Insurance Services didn’t escape either. Regulators said the company rotated through three heads of claims between April 2023 and May 2025.
For several months in late 2022 and early 2023, it had none at all. That vacuum, according to CDI notices, left adjusters without proper training, authority, or oversight.
Even after Tesla installed a new head of claims in Q2 2023, complaints spiked again the following year.
The language in the orders is sharp. Regulators said policyholders faced egregious delays at every stage – initial reporting, updates, settlement.
Some customers carried third-party liability exposure, others ate out-of-pocket costs. CDI also said the insurers neglected to tell policyholders that denied claims could be reviewed by the department.
“In 2025, Tesla companies already had more justified complaints and more violations than the three previous years combined,” the department wrote. They noted Tesla Insurance Services promised fixes, but the numbers kept climbing.
Regulators argue the practices caused financial harm and emotional stress. The CDI wants the companies stopped from repeating what it describes as willful unfair conduct.
Tesla Insurance and State National didn’t respond to requests for comment.
