Tesla Insurance is facing a potential consumer class action lawsuit in California alleging the company failed to process claims in a timely manner, forcing policyholders to pay for replacement vehicles out of pocket. The lawsuit, filed by North Hollywood resident Carlos Magana in Los Angeles County Superior Court on July 11, accuses Tesla Insurance of breach of contract, breach of the covenant of good faith and fair dealing, and violations of California’s Unfair Business Practices Act.
According to the complaint, Magana’s 2024 Dodge Ram was stolen on January 2, 2025. Despite filing a police report and submitting his claim to Tesla Insurance Services Inc., the company allegedly failed to meet California’s required timelines, which mandate that insurers begin investigations within 15 days, make a claim decision within 40 days, and issue a final payment within 30 days thereafter. (via Reuters)
By March 13 — the deadline for resolution — Magana had yet to receive compensation.
The lawsuit states that Magana was repeatedly put on hold for up to three hours without speaking to a live representative and was often given inconsistent information by Tesla’s claims team. After 87 days of waiting, on March 30, he says he was forced to finance the purchase of a replacement vehicle because Tesla had not reimbursed him for his loss.
It wasn’t until April 14 — 102 days after the initial claim — that an adjuster issued a total loss offer. However, Magana alleges the valuation was incorrect and attempts to rectify the issue with Tesla went unanswered.
As of mid-July, more than 187 days have passed since Magana filed his claim, and Tesla Insurance has still not resolved the matter, the lawsuit alleges.
Tesla launched its insurance division in 2019, initially in California. Since then the company has expanded coverage to now include 12 states across the U.S. While the company primarily targets Tesla owners, it also allows owners to insure non-Tesla vehicles, aiming to simplify coverage for households with multiple cars.
The company has yet to respond to the lawsuit or comment on the allegations. The case is Carlos Magana v. Tesla Insurance Co., No. 25STCV20622.
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