California’s chief insurance authority is pursuing substantial penalties from State Farm, alleging the insurer breached state regulations while managing claims from the 2025 wildfires near Los Angeles.
On Monday, Insurance Commissioner Ricardo Lara disclosed that State Farm committed numerous legal infractions.
Lara initiated the probe last June following complaints from victims of the Palisades and Eaton fires. These complaints alleged that the state’s largest homeowner insurer was procrastinating and mishandling claims related to property damage and potential smoke contamination.
“Our inquiry revealed that State Farm delayed payments, undercompensated, and overwhelmed policyholders with bureaucratic hurdles during their most vulnerable times. This behavior is intolerable, and we are determined to enforce accountability,” Lara declared in a statement.
The fires were catastrophic, claiming 31 lives and demolishing over 16,000 buildings.
The investigation reviewed 220 randomly selected claims to State Farm, uncovering nearly 400 infractions. These included inadequate payments and delays or inefficiencies in processing claims. State Farm was responsible for handling over 11,000 claims from the Los Angeles wildfires, which represented about one-third of the total claims filed, according to state officials. The department indicated that thousands might have been impacted by these unlawful practices.
The final amount of penalties will be recommended by an administrative judge and finalized by Lara.
State Farm is the second insurance company to face legal actions from the state over its handling of LA fire claims. The department is also seeking remedies against the FAIR Plan for denying smoke damage claims. The plan is an insurance pool that all the major private insurers pay into, and the plan then issues policies to people who can’t get private insurance because their properties are deemed too risky to insure.
State Farm didn’t immediately respond to request for comment.
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