California Accuses Insurance Companies of Mishandling Claims

Policyholders Are Urged To Keep Records and Track All Communications.

California insurance officials are cracking down on three companies tied to Tesla’s auto insurance program, accusing them of putting profits ahead of policyholders. Regulators say the companies have repeatedly failed to handle claims properly. The state is ready to take serious action if things don’t change soon.

The California Department of Insurance (CDI) announced that State National Insurance Co., Tesla Insurance Co., and Tesla Insurance Services Inc. could lose their licenses to operate in the state and face steep financial penalties. State investigators say insurance companies consistently delayed claims, denied valid claims, and failed to conduct proper investigations. This has left victims of car accidents waiting far too long for fair compensation.

At Clancy & Diaz, LLP, we’ve seen how delay tactics and bad-faith denials can leave injured drivers and their families in limbo. When you’re hurt in a crash, the last thing you need is an insurance company stonewalling your claim while bills pile up. That’s why we always tell our clients to document everything. Save emails, write down who you spoke to, and keep copies of every form or denial.

If you’re injured and struggling to get the insurance company to do the right thing, don’t go it alone. Our team can step in, hold them accountable, and fight for the compensation you’re owed.

What led to the state’s accusations?

California regulators first noticed something was off back in 2022, when complaints began pouring in from frustrated drivers who said they couldn’t reach their insurance companies or were left waiting months for their claims to be resolved. That year alone, the department received 97 complaints against State National and issued 40 violations for breaking insurance laws.

By 2023, things got worse. Complaints tripled, and policyholders said they were getting the runaround instead of the coverage they paid for. Then, in 2024, complaints against State National tripled again. Regulators investigated 928 grievances that year and issued 835 violations of California’s insurance code.

Even as Tesla Insurance expanded its operations in July 2024 with its own private passenger program, the trend continued. The state said it received 35 complaints against Tesla Insurance that year, of which only three were found justified. Fast forward to 2025, and the number of complaints skyrocketed again: 842 against Tesla’s insurance arm and 1,095 against State National, all by late September.

What could happen next?

The insurance department has given the companies 15 days to respond to the allegations. If they fail to take corrective action, the state will schedule an administrative hearing to decide whether the insurance companies can keep doing business in California.

Possible outcomes include:

• Suspension or revocation of their licenses to sell auto insurance in the state.
• Financial penalties for repeated violations.
• Mandatory reforms to claims-handling practices.

In its statement, CDI said it believes these companies’ conduct shows “incompetency, untrustworthiness, and misconduct” serious enough to justify removing them from the California insurance market.

Why is Tesla’s insurance program under scrutiny?

Tesla entered the insurance business with big promises. The company said its in-house insurance program would be faster, smarter, and more transparent than traditional insurance companies, using real-time driving data from Tesla vehicles to calculate premiums and assess risk.

But in practice, regulators say that hasn’t been the case in California. Instead of streamlining claims, Tesla’s insurance partners allegedly caused major delays and frustration for drivers. The Department of Insurance says these companies repeatedly failed to investigate accidents promptly or to communicate with customers waiting for repairs and payouts.

Tesla Insurance, State National, and Tesla Insurance Services have not yet responded publicly to the state’s accusations. In the past, Tesla has pledged to improve claims handling and communication, but according to the department, those promises have not led to lasting results.

How are Tesla owners affected?

If you have a Tesla Insurance policy in California, you may not see immediate changes, but the situation could quickly evolve. If the companies’ licenses are suspended or revoked, policyholders may have to switch insurers or face delays in processing ongoing claims.

California’s Department of Insurance says it’s committed to protecting consumers, even if that means forcing the companies to stop writing policies. Policyholders with active claims should keep detailed records of all communications, maintain copies of repair estimates, and follow up regularly with the insurance companies until their claim is resolved.

If the companies fail to comply with the state’s requirements, California law gives regulators the power to intervene and ensure that consumers aren’t left stranded without coverage or compensation. It’s a reminder that the state is willing to hold insurance companies accountable when they don’t treat policyholders fairly. California’s insurance regulators have some of the strongest consumer protection laws in the country, and they’re not afraid to use them.

For now, Tesla drivers in California should watch this case closely. Whether it ends in major fines, license suspensions, or changes to Tesla's insurance practices, the state isn’t backing down.

Why this all matters for crash victims

Think of your insurance policy like a safety net; it’s only useful if it’s strong enough to catch you when you fall. But when companies delay, deflect, or flat-out ignore valid injury claims, that net unravels fast. You’re left dangling, trying to pay medical bills and overcome lost wages while the company that promised to protect you keeps stalling.

That’s exactly why California’s enforcement action matters. These aren’t isolated complaints; they're part of a growing pattern in which big insurers make it harder for everyday drivers to get the help they need after a crash.

At Clancy & Diaz, LLP, we’ve seen this story before. When insurance companies think they can hide behind fine print and automated systems, it takes real legal pressure to make them move. We’re not afraid to apply it.

Get a car accident lawyer who knows how to take on the insurance companies

If you were hurt in a car accident in California and you’re getting the runaround from the insurance company, get a law firm on your side that knows how to fight back. Insurance carriers often delay, deny, or undervalue legitimate claims, especially after devastating crashes that involve severe injuries and high repair costs. That’s when having an experienced car accident lawyer can help you level the playing field.

Attorney Pete Clancy and his dedicated legal team can step in to deal directly with the insurance company, handle all communications, and demand the full compensation you deserve for medical expenses, lost income, and the pain your injuries have caused. Whether your crash happened in Walnut Creek, Concord, Pleasant Hill, or anywhere in the Bay Area, we can protect your rights.

You can start with a free consultation to learn your options and get honest answers about your case. Since we work on a contingency fee basis, there are no upfront costs. If you’ve been injured in a crash, contact us today and let us fight for the compensation you’re owed.

"Pete's persistence resulted in a payout that I didn't expect in amount. He listened and helped me through a difficult process. He is the best." - J.F., ⭐⭐⭐⭐⭐