State Farm rejected the findings of a California investigation that alleged the state’s largest home insurance company violated the law by mishandling customers’ claims in the aftermath of the devastating wildfires that ravaged Los Angeles in January 2025.
On Monday, the California Department of Insurance concluded that State Farm violated state law nearly 400 times in a sampling of 220 cases. The department suggested the violations were tied to underpaid or otherwise mishandled insurance claims.
Recommended Stories
“We reject any suggestion State Farm engaged in a general practice of mishandling or intentionally underpaying wildfire claims, and we will respond through the process,” the insurer said in a statement.
State Farm revealed it has paid more than $5.7 billion on 13,700 auto and home insurance claims related to the wildfires.
CDI estimated State Farm customers filed roughly 11,300 insurance claims related to the wildfires, accounting for nearly 33% of the total 38,835 claims filed with all insurers. Based on those numbers, the state agency believes thousands of survivors may have been affected by State Farm’s actions, or lack thereof.
“Wildfire survivors came to us for help, and we followed the facts,” CDI Commissioner Ricardo Lara said in a press release. “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.”
Following the investigation, California is considering suspending State Farm’s license for up to a year.
“The threat to suspend State Farm General’s ability to serve customers over primarily administrative and procedural errors is a reckless, politically motivated attack that could ultimately cripple California’s homeowners insurance market,” the company said.
TAXPAYERS COULD FOOT $100 MILLION JET FUEL BILL FOR WILDFIRES AS PRICES SPIKE
If California finds State Farm willfully violated the law, a maximum fine of $4 million will be imposed. State officials on Monday called for the company to pay more than $2 million in damages.
The two largest wildfires that hit the Southern California city destroyed more than 16,000 structures, including homes and businesses. They also resulted in at least 31 direct deaths, according to official state figures. However, an August 2025 study conducted by Boston University and the University of Helsinki found an additional 409 deaths that were attributable to health risks from the wildfires.
