Share and Follow
LOS ANGELES, Calif. (KTXL) — The California Department of Insurance is demanding millions in fines from State Farm due to the company’s handling of claims related to Los Angeles wildfires. This marks the department’s most substantial penalty related to a disaster in the past two decades.
The announcement came on Monday after a market conduct examination revealed several alleged shortcomings in State Farm’s response to the fires that ravaged Altadena and the Pacific Palisades in January 2025.
Upon reviewing a sample of 220 claims, out of the approximately 11,300 residential claims submitted by State Farm customers post-disaster, investigators identified 398 violations of California law. State Farm accounts for nearly one-third of the 38,835 claims filed following the wildfires.
The alleged violations include delayed and insufficient responses, with regulators claiming that the company often missed crucial deadlines, such as beginning investigations within 15 days, deciding on claims within 40 days, and paying accepted claims within 30 days, as required by state law.
Additional violations reportedly involve underpaying claims, offering settlements that were deemed “unreasonably” low, failing to issue written denials for testing related to smoke damage, and neglecting to send necessary communications to policyholders.
“Wildfire survivors came to us for help, and we followed the facts,” Insurance Commissioner Ricardo Lara said in a statement. “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 agency is seeking millions of dollars in penalties, Lara said Monday. Regulators will also require State Farm to take “corrective action” to accelerate payments and resolve claims.
The insurance department filed an “accusation and order to show cause” against the insurance company. Officials said the filing is the first step toward a public hearing before an administrative law judge.
The department alleges State Farm violated the Unfair Insurance Claims Practices Act and other related regulations. State Farm did not immediately respond to a request for comment.
“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. “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.”
State Sen. Ben Allen, a candidate to succeed Lara as insurance commissioner, said on social media Monday he is happy to see the enforcement action.
“Really glad to see this finally moving many months after we called for this investigation, which has now definitively shown what we’ve known for a long time — that State Farm behaved atrociously with so many fire survivors,” the Pacific Palisades Democrat said. “They must be held accountable.”