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3mo ago

California Probes State Farm Over Wildfire Claims Practices

The Department of Insurance will assess compliance with consumer protection laws after policyholders reported delayed payments, smoke damage denials and inconsistent claims management.

A State Farm insurance company sign sits amid the rubble of a building destroyed by the Palisades Fire on Sunset Boulevard in the Pacific Palisades neighborhood of Los Angeles on January 16, 2025.
A State Farm sign hangs onto the remains of building destroyed by the Eaton Fire in Altadena in Los Angeles County on Feb. 3. The California Department of Insurance will look into customer complaints about State Farm's claims processing in the wake of the fires.
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Overview

  • Insurance Commissioner Ricardo Lara launched a market conduct examination on June 12 to determine whether State Farm violated California’s consumer protection and claims‐handling rules.
  • The inquiry will scrutinize troubling patterns such as frequent adjuster reassignments, inconsistent treatment of similar claims, and inadequate recordkeeping identified in complaints.
  • State Farm has received over 12,800 wildfire claims and paid more than $3.85 billion as of early June, estimating $7.6 billion in total fire-related costs before reinsurance reduces its net losses to about $612 million.
  • On June 1, Lara approved a 17 percent emergency rate hike for State Farm customers following the insurer’s request to shore up capital after the costly wildfires.
  • The Department of Insurance is urging survivors to file formal complaints to support a review that could last several months and lead to reforms or increased payouts if violations are uncovered.