Tesla faces class action lawsuit over alleged insurance premium inflations

Tesla is gearing up to defend itself in a proposed class action lawsuit accusing the electric vehicle giant of overcharging for insurance. The lawsuit claims that Tesla inflated insurance premiums based on false crash warnings instead of actual driving behaviour.

Judge Michael Markman of Alameda Superior Court, California, granted Tesla more time to prepare its defense due to delays in collecting information. He scheduled a hearing for October 2025 to decide whether the case should proceed as a class action.

Porsche, Aston Martin raise U.S. prices as 15% tariffs hit

Brazil urges U.S. to drop 50% tariffs on food, Embraer aircraft

The case began last year when a Tesla customer sued the company on behalf of drivers in 11 states. The plaintiff argues that Tesla’s insurance practices violate California’s unfair competition law and breach contracts with drivers. The lawsuit alleges that Tesla, which sells insurance directly to its customers, uses inaccurate crash warnings to determine premiums.

At a recent hearing, Tesla’s attorney Min Kang highlighted the difficulties in gathering the necessary information due to the involvement of multiple states and the recent departure of a key Tesla employee. “Just last week we lost our main contact at the company,” said Kang. “So that is complicating things.”

Tesla, based in Austin, Texas, has denied any wrongdoing. The company insists that its insurance premiums are based on real-time driving behaviour, using a “safety score” derived from vehicle data such as hard-braking, aggressive turning, and forward collision warning alerts.

However, many Tesla drivers report receiving random and unwarranted Forward Collision Warnings, which negatively impact their safety scores and result in higher premiums. The complaint states, “Many Tesla drivers have reported suffering sporadic and random Forward Collision Warnings when there is no danger in sight.”

As the legal battle continues, Tesla and its attorneys are working to gather the necessary information to defend against the accusations. Both Tesla and the attorney for the named plaintiff have not yet responded to requests for comment.