California’s insurance department is pursuing millions of dollars in fines against State Farm following an investigation that uncovered widespread violations in the company’s handling of wildfire victim claims.
Ricardo Lara, the state’s Insurance Commissioner, announced Monday that investigators discovered hundreds of legal violations by the insurance giant while processing claims from last year’s devastating Los Angeles-area fires.
The probe began in June after survivors of the deadly Palisades and Eaton fires complained that California’s biggest home insurance provider was stalling payments and mismanaging claims related to property damage and smoke contamination.
“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,” Lara said in a statement.
The twin blazes proved catastrophic, claiming 31 lives and wiping out more than 16,000 buildings across the region.
Investigators examined 220 randomly selected State Farm claims and discovered nearly 400 violations, including insufficient payments and sluggish claim processing. State Farm handled over 11,000 wildfire claims, representing approximately one-third of all filed claims, according to state data. Officials estimate thousands of policyholders may have been impacted by these illegal practices.
An administrative judge will determine the final penalty amount before Lara gives final approval.
State Farm represents the second insurance company facing state enforcement action over wildfire claim handling. Regulators are also pursuing remedies against the FAIR Plan for rejecting smoke damage claims. This insurance pool, funded by major private insurers, provides coverage to property owners unable to secure private insurance due to high-risk locations.
State Farm has not yet responded to requests for comment on the allegations.
