Tesla’s auto insurance division is facing a federal lawsuit in the US state of Arizona, with plaintiffs alleging that the company has systematically underpaid millions of dollars in claims by failing to provide required coverage for uninsured and underinsured motorists.
The complaint was brought by Athena Boggs and Jared Miiller, who allege that Tesla General Insurance did not comply with an Arizona statute requiring insurers to provide written offers of uninsured and underinsured motorist coverage equal to the policyholder’s bodily injury liability limits, reported Reuters.
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According to the lawsuit, these alleged failings have left injured customers without the financial coverage required by law.
The legal action focuses on a crash in May in which one of the plaintiffs was injured.
The other driver reportedly carried $100,000 in liability insurance, but Tesla paid only $25,000 in underinsured motorist benefits – less than what the plaintiffs contend Arizona law demands.
This lawsuit also points out that Tesla did not permit “stacking” of coverage, which is allowed under certain conditions in Arizona and enables policyholders to combine benefits from multiple vehicles on the same policy.
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By GlobalDataThe plaintiffs argue that Tesla failed to follow the state’s specific requirements before denying this stacking option to them.
Robert Carey from Hagens Berman Sobol Shapiro, the lead attorney for the plaintiffs, described the action as “the first of its kind” and said his firm is investigating similar claims in other states.
Tesla General Insurance, previously operating as Newport Insurance Company, began selling auto insurance policies in Arizona earlier this year.
The litigation seeks damages for breach of contract and additional causes on behalf of what is estimated to be at least 100 motorists who may have been affected.
Tesla has not commented on the lawsuit, reported the media outlet.
The case is listed as Athena Boggs and Jared Miiller v. Tesla General Insurance Inc., U.S. District Court, District of Arizona, No. 2:25-cv-04108-MTM.
Tesla began offering its own vehicle insurance products in 2019.
