Tesla’s auto insurance arm hit with consumer class action in California

Electric vehicle maker Tesla's TSLA auto insurance unit has been hit with a consumer lawsuit in California accusing it of deliberately scheming to delay and minimize insurance payouts, causing some motorists to abandon claims or pay out of pocket.

The proposed class action filed in the Los Angeles Superior Court on July 11 alleged Tesla Insurance failed to implement and maintain sufficient claims-handling procedures for its customers.

Tesla, led by billionaire entrepreneur Elon Musk, offers insurance policies in California to Tesla drivers and also to drivers of non-Tesla vehicles.

The lawsuit, which seeks unspecified monetary damages, alleges Tesla violated California’s unfair competition law and seeks to represent potentially thousands of motorists in California who had bought insurance from the company.

Tesla and a lawyer for the named plaintiff did not immediately respond to requests for comment.

Tesla launched its auto insurance unit in 2019, promising what Musk at the time called a “vastly better” service than rival providers.

A Reuters investigation in 2023 showed a raft of consumer complaints about Tesla's insurance claims processing, and also scrutiny from state regulators. The Ohio Department of Insurance at least twice in 2023 found Tesla had violated state regulations for claims handling, including for a lack of timely communications with a policyholder.

The plaintiff in the new lawsuit in California, a resident of North Hollywood, purchased a Tesla insurance policy in October for a leased Dodge Ram pickup truck, according to the lawsuit.

After the vehicle was stolen this year, he filed an insurance claim under his policy but struggled to get in touch with Tesla, with calls to adjusters frequently unanswered, the lawsuit said. The policyholder has yet to receive compensation or other benefits, the complaint said.

Tesla’s “wrongful and unreasonable delays and refusals to act” have forced consumers to wait months or even years without reliable transportation or funds needed for repairs or a replacement vehicle, the lawsuit said.

The case is Carlos Magana v. Tesla Insurance Co, Los Angeles Superior Court, No. 25STCV20622.

For plaintiff: Maro Burunsuzyan and David Scott of the Law Offices of Maro Burunsuzyan

For defendant: No appearance yet

Read more:

Tesla fails to end Florida lawsuit over fatal Model S crash

Tesla sued over Model S crash that killed three in New Jersey

Musk’s Tesla seeks to guard crash data from public disclosure

Tesla settles wrongful death lawsuit claiming sudden acceleration in Ohio crash

Tesla launched its own car insurance. These drivers say it's a lemon.