Los Angeles County is investigating State Farm over how it handled insurance claims from the wildfires that swept through the area in January. The county’s Board of Supervisors launched the probe amid complaints from policyholders who say the company delayed payments, offered low settlement amounts, or denied valid claims.
The investigation focuses on whether State Farm violated California’s Unfair Competition Law. County officials have told the insurer that if any unfair or illegal practices are found, they must stop immediately and follow state laws fully.
State Farm is the largest home insurance company in California. After suffering billions in wildfire-related losses, the company recently received approval to raise rates by 17%. It also scaled back the number of new policies it sells in the state. The rate hike request was increased again in May.
A survey done in October by Embold Research on behalf of a nonprofit called the Department of Angels found that customers of State Farm had worse experiences than those of other insurers. Many reported having claims denied, getting low offers from adjusters, poor communication, and dealing with multiple claim representatives.
The report highlighted an urgent problem. Many survivors’ temporary housing coverage is ending soon. They need their insurance claims settled quickly to either return home or find new long-term places to live.
State Farm responded by saying the goals of the investigation are unclear and sees it as a distraction from their work helping customers. The company says it is handling more than 13,500 claims from the fires and has already paid close to $5 billion in claims. Nearly 200 claims staff are still working in the field.
Consumer advocacy group Consumer Watchdog welcomed the investigation. Their executive director, Carmen Balber, said wildfire survivors have waited almost a year for help and faced delays, underpayments, and claim denials. She called the county’s action a chance for victims to get real accountability.
The wildfires destroyed about 11,000 homes and drew attention to California’s ongoing homeowners insurance crisis. Some wildfire victims have even called for the resignation of California Insurance Commissioner Ricardo Lara. This came after a report suggested that an agreement Lara made with insurers allowed many policyholders to be dropped just before the fires.
Total insured losses from the wildfires are estimated to be $30 billion to $40 billion. State Farm and other insurers have each reported paying over $1 billion in claims.
Los Angeles County Supervisor Lindsey P. Horvath said residents have paid State Farm millions over the years. She stated that families who lost everything deserve fair and fast treatment—not delays or lowball offers. Horvath urged State Farm to keep its promise to be a “good neighbor” and support customers through this difficult time.