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The California Department of Insurance launched enforcement actions against Tesla Insurance Services Inc. and Tesla Insurance Company companies for allegedly failing to adequately handle hundreds of California automobile policy claims.

The actions are also aimed at State National Insurance Company. Tesla Insurance Services Inc. is an appointed agent for State National, an admitted insurer in California.

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

The actions allege that, despite being repeatedly warned by the California Department of Insurance, the Tesla Companies and State National chose persisted with non-compliant claims-handling practices.

The CDI said it has received consumer complaints related to the handling of auto policy claims beginning in 2022. The department reportedly repeatedly warned the Tesla Companies and State National, and had meetings and correspondence, but the number of consumer complaints and violations continued to mount.

The companies face monetary penalties up to $5,000 for each unlawful, unfair, or deceptive act, or up to $10,000 for each such act determined to be willful.

The department’s accusations, including the following alleged violations:

• Egregious delays in responding to policyholder claims in all steps of the claims handling process, causing financial harm, out-of-pocket expenses and potential third-party liability exposure.
• Unreasonable denials and delays in fully paying valid claims to consumers
• Failure to conduct thorough, fair, and objective investigations of claims.
• Failure to advise policyholders of their rights to have their claims denials reviewed by the department.

The companies have 15 days to respond to the accusations.

Topics California Claims Tesla