California insurance regulator launches investigation into State Farm
over claims from LA fires
[June 13, 2025] By
SOPHIE AUSTIN and MEAD GRUVER
SACRAMENTO, Calif. (AP) — California's top insurance regulator on
Thursday launched an investigation into State Farm over the company's
handling of claims from the January Los Angeles-area wildfires.
The investigation comes after survivors of the Palisades and Eaton fires
said that the state's largest home insurer was delaying and mishandling
claims regarding damage to their homes and possible contamination from
smoke.
The blazes destroyed thousands of buildings around Los Angeles, killed
30 people and displaced thousands of others. They were estimated to be
among the costliest natural disasters in U.S. history.
California Insurance Commissioner Ricardo Lara said the investigation
will review whether the company complied with state consumer protection
and claim-handling laws.
“Californians deserve fair and comprehensive treatment from their
insurance companies," the Democrat said in a statement. "No one should
be left in uncertainty, forced to fight for what they are owed, or face
endless delays that often lead consumers to give up.”
State Farm, which has about 1 million home insurance customers in
California, said it will cooperate with the state's review. The insurer
has received roughly 13,000 claims related to the fires and has paid out
about $4 billion to customers, the company said.
“We’re here to help our customers recover and we empathize with those
who are rebuilding their lives,” State Farm said in a statement. “Our
focus continues to be on supporting our customers in their recovery from
the largest fire event we have ever experienced.”
Survivors of the Eaton fire in Altadena have raised concerns about
possible lead, asbestos and heavy metal contamination in their homes
because of smoke.
State Sen. Sasha Renée Pérez, a Democrat representing Pasadena, in April
called on Lara to launch a probe into the alleged mishandling of claims.
“The survivors of the Los Angeles County fires are experiencing
financial and emotional hardships due to State Farm’s delays and denials
of their valid insurance claims," she and other lawmakers said at the
time. "Despite years of faithfully paying premiums, they have been met
with excessive documentation demands, denial of claims despite clear
evidence, a convoluted and arduous claims process, and silence when
seeking help after the disaster.”
Lara said homeowners should file formal complaints regarding State
Farm’s handling of claims to help the state take action. The Department
of Insurance announced a task force last month to recommend best
practices for addressing smoke damage.
A wildfire victims advocate praised the investigation as a “critical
step toward accountability."
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Megan Mantia, left, and her boyfriend Thomas, only first game given,
return to Mantia's fire-damaged home after the Eaton Fire swept
through the area, Jan. 8, 2025, in Altadena, Calif. (AP Photo/Ethan
Swope, File)
 “State Farm is unjustly denying
legitimate smoke damage claims, forcing families already harmed by
the Eaton and Palisades fires to make the impossible choice of
living in toxic homes or paying tens of thousands out of pocket for
remediation. We stand ready to hold State Farm accountable,” Kiley
Grombacher, co-founder of the California Fire Victims Law Center,
said in a statement.
Insurers including State Farm had difficulty doing business in
California even before the wildfires. In 2023, State Farm and others
stopped issuing residential policies because of the wildfire risk.
Last year, Lara unveiled regulations aimed at giving insurers more
latitude to raise premiums in exchange for more policies in
high-risk areas. State Farm said at the time the company was
struggling.
The wildfires, which destroyed more than 16,000 buildings, made
matters even worse.
In May, state regulators allowed State Farm to raise premiums 17%
statewide for its California home insurance customers to help the
company rebuild its capital after the costly wildfires.
State Farm initially sought a 22% rate increase for homeowners but
revised it down a recent hearing before an administrative judge. The
new rates in effect this month include a 38% hike for rental owners
and 15% for tenants.
People who lost homes in the fires sued in April, alleging State
Farm and other insurers colluded to “suddenly and simultaneously”
drop coverage or halt writing new policies in fire-prone areas,
including areas that burned. That left the homeowners underinsured
and struggling to rebuild, the lawsuit alleges.
The American Property Casualty Insurance Association, the largest
national trade association representing home, auto and business
insurers, called the lawsuits meritless, saying it monitors to
ensure its members comply with the state’s antitrust laws.
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Associated Press writer Mead Gruver reported from Cheyenne, Wyoming.
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