Tesla's Safety Score Under Fire: How Telematics Data Sparks Insurance Disputes and Regulatory Scrutiny
Tesla Insurance promised a revolution: lower premiums for safe driving, guided by real-time data and a proprietary Safety Score. But a class-action lawsuit filed in California alleges the system is fundamentally flawed, accusing Tesla of using inaccurate forward-collision warnings—rather than actual crash history—to inflate customer rates. A federal judge has allowed the case to proceed, signaling the claims merit serious consideration.
According to the lawsuit, detailed in Reuters reporting, the Safety Score algorithm factors in hard braking, aggressive turning, unsafe following distance, and frequent forward-collision alerts. Critics argue the system can penalize drivers for incidents that never posed real danger, transforming a promised reward into a punitive tool.
Following driver complaints about soaring premiums linked to spurious warnings, Tesla adjusted its formula. In April 2025, the company removed forward-collision warnings from its Safety Score Beta calculation—a move reported by trade publications like Insurance Business and seen as a direct response to legal and customer pressure.
Simultaneously, the California Department of Insurance launched enforcement proceedings against Tesla Insurance Services and its underwriting partner for repeated violations of state claims-handling regulations. The department cited delayed payouts, inadequate investigations, and a pattern of leaving policyholders without timely repairs or fair settlements.
"You provide constant driving data, follow the app's coaching, yet still face a double squeeze: higher premiums based on opaque metrics, and then poor service when you actually file a claim," said Michael Torres, a regulatory analyst at the Center for Consumer Advocacy. "It undermines the core promise of usage-based insurance."
Tesla is not alone in drawing regulatory heat. In January 2025, the Federal Trade Commission (FTC) reached a settlement with General Motors and its OnStar service, banning them for five years from sharing detailed driving behavior data—like hard braking and speeding—with consumer reporting agencies without clear consent. The FTC found this data was used to generate reports that influenced insurance quotes, often without drivers' full knowledge.
The parallel cases reveal a growing pattern: while telematics-based insurance is marketed as a personalized discount for safe drivers, it can lead to opaque scoring, extensive data harvesting, and regulatory intervention after consumer harm occurs.
User Reactions:
"I feel betrayed," said David Chen, a Tesla Model 3 owner from San Diego. "I bought into the tech vision, but my premium jumped 30% after a few 'false alarm' warnings on empty roads. They're using the data against us, not for us."
"This is the inevitable friction of innovation," countered Priya Sharma, an automotive tech consultant. "Telematics can make insurance fairer by assessing actual risk. The key is transparency and oversight—not abandoning the model altogether."
"It's digital surveillance with a price tag," snapped Marcus Johnson, a consumer rights advocate. "They sell you a 'safety score' while building a permanent dossier on your every move. This isn't insurance; it's behavioral control with monthly premiums."
"As a data scientist, I see both sides," noted Dr. Elena Rodriguez. "The algorithm needs refinement, but the real issue is consent. Most drivers don't understand what data is collected, how it's scored, or who else might access it."
For current Tesla Insurance customers, experts advise treating the Safety Score as an informational tool—not a definitive badge of safe driving. They recommend obtaining clear, written explanations of what behaviors impact premiums, maintaining quotes from traditional insurers for comparison, and being cautious about sharing real-time driving data for discounts that may prove costly.
The simplest safeguard for now may be separation: enjoy the vehicle, but insure it through a conventional provider. Until automakers and insurers demonstrate they can manage telematics transparently and fairly, keeping that data stream disconnected might be the most prudent policy.
This story was originally published by Men's Journal on Feb 2, 2026, where it first appeared in the Gear section. Add Men's Journal as a Preferred Source by clicking here.