The California Department of Insurance (DOI) has taken enforcement action against State Farm General Insurance Co. after uncovering what it called widespread improper handling of claims from survivors of the 2025 Los Angeles wildfires.
This action followed an extensive review of consumer complaints and an investigation that the DOI said revealed unlawful practices in more than half of the claims examined. State Farm policyholders filed about 11,300 claims, which is nearly a third of all claims across insurers, indicating that many survivors may have been affected due to these issues.
The DOI aims to impose millions of dollars in penalties on State Farm, the largest since wildfire disasters began in this century. Additionally, the DOI will also require State Farm to correct its practices to expedite payments and resolve outstanding claims.
The findings from the investigation reveal a trend of delays and denials in claims. Among a sample of 220 claims examined, there were 398 violations of state law, reflecting issues such as slow investigations, unreasonable underpayment of claims, and confusion caused by multiple adjusters. Additionally, a significant number of smoke damage claims faced denials and delays, highlighting inadequate communication from State Farm.
According to Insurance Commissioner Ricardo Lara, this investigation has underscored the need for proposed legislation which seeks to improve claims handling for future disasters through two proposed laws: the Disaster Recovery Reform Act and the Smoke Damage Recovery Act.
“The Los Angeles fires were one of the most destructive disasters in our state’s history. Survivors deserve a fair, timely recovery, not obstacles and delays,” Lara said in a press release. “We are taking a two-pronged approach: legal action to address State Farm’s conduct, and legislative action to ensure this does not happen again.”
Wildfire survivors experiencing issues with their claims are encouraged to file a complaint with the DOI. Furthermore, a recent settlement agreement has been reached regarding State Farm's emergency rate request, which awaits review.