California Insurance Regulators Say State Farm Mishandled Wildfire Claims

Authored by Dylan Morgan via The Epoch Times,

The California Department of Insurance announced on May 4 it filed an enforcement action against State Farm, alleging the company significantly mishandled claims from survivors of the 2025 Los Angeles wildfires.

“Wildfire survivors came to us for help, and we followed the facts,” Insurance Department Commissioner Ricardo Lara said.

“Our investigation found that State Farm delayed, underpaid, and buried policyholders in red tape at the worst moment of their lives. That is unacceptable, and we are taking decisive action to hold them accountable.”

The Palisades Fire and the nearby Eaton Fire, which ignited in Altadena, California, on Jan. 7, 2025, claimed around 30 lives and destroyed more than 12,000 structures.

The Insurance Department said that State Farm received approximately 11,300 of the nearly 39,000 claims related to the Los Angeles wildfires filed across all insurers, and that Lara launched an investigation into the insurance company in June 2025 after the department heard many complaints.

According to the department, it examined 220 of the claims filed with State Farm and found a total of 398 violations in 114 of those claims.

These violations consisted of “slow and inadequate investigation” through failing to meet deadlines in investigating claims, accepting or denying claims, and providing notice for additional time.

The Insurance Department also alleged that State Farm made unreasonably low settlement offers and underpaid claims.

This enforcement action seeks millions of dollars in penalties, which the department said is the largest amount pursued this century relating to a wildfire disaster.

The department also wants State Farm to speed up payments and settle outstanding claims.

The property lines of homes burned during the Palisades Fire are visible in the Pacific Palisades neighborhood of Los Angeles on June 9, 2025. John Fredricks/The Epoch Times

State Farm denied any mishandling or intentional underpaying of wildfire claims and said the violations the Insurance Department identified require only about $40,000 in additional payments beyond the more than $5.7 billion it has paid to those affected by the fires.

“California’s homeowners insurance market is the most dysfunctional in the country ... the state is facing an availability and affordability crisis, and the California Department of Insurance should take responsibility for regulatory delays and uncertainty that have contributed to fewer choices and higher costs for consumers,” the company said in its statement.

State Farm said it strongly disagrees with the department’s characterization of the company, and that any prospect or threat to suspend its licensing over “primarily administrative and procedural errors” is a reckless and politically motivated attack.

“Using a thin sample of claims to justify sweeping allegations turns regulatory oversight into a political weapon, creating headlines instead of delivering facts and real consumer protection. [The department’s examination] was based on a sample of 220 files, and most of the issues cited were administrative or process-related,” State Farm said.

The insurance company said every issue identified has already been, or is being addressed through claim reviews, and that it will provide supplemental payments when appropriate.

The same day, California Governor Gavin Newsom issued a statement warning insurance companies they may be subject to state enforcement actions if they unlawfully delay or deny claims from survivors of the Los Angeles fires.

In November 2025, Los Angeles County launched its own investigation into State Farm’s handling of insurance claims.

“The County has heard loud and clear from wildfire survivors that State Farm’s delays are standing in the way of rebuilding. Fair and timely insurance payments aren’t a privilege; they’re a right,” Los Angeles County Board of Supervisors Chair Kathryn Barger said.

On March 31, President Donald Trump also weighed in on the situation, saying State Farm and other insurers should “get their act together” after meeting with California politicians and hearing about the difficulties the wildfire victims faced in their insurance claims.

“It was brought to my attention that the Insurance Companies, in particular, State Farm, have been absolutely horrible to people that have been paying them large premiums for years, only to find that when tragedy struck, these horrendous Companies were not there to help!” Trump wrote on Truth Social.

Tyler Durden Thu, 05/07/2026 - 20:55