Los Angeles County filed a lawsuit against State Farm General on Monday, alleging that the insurer engaged in illegal and deceptive business practices following the devastating Palisades and Eaton fires. The legal action in L.A. County Superior Court targets complaints of delayed, denied, and systematically underpaid claims from hundreds of policyholders.
Lawsuit Alleges Systematic Underpayments and Delays
County officials stated that their investigation revealed unreasonable processing delays and systematic underpayments by State Farm. According to the sources, investigators found that the insurer illegally suppressed smoke damage claims and failed to substantially comply with county document requests during the probe. L.A. County Supervisor Kathryn Barger stated at a Monday news conference that survivors are simply asking for what is right.
State Farm spokesman Bob Devereux strongly disagreed with the county’s characterization in a statement reported by the sources. Devereux noted that the company has paid more than $6.2 billion on claims related to the two wildfires, including about $1 billion for smoke-related damage, with approximately 78% of claims closed. State Farm stated it will respond to the lawsuit through the legal process.
Farmers Insurance Faces County Probe
In addition to the lawsuit against State Farm, Los Angeles County launched an investigation into Farmers Insurance regarding its handling of wildfire claims, according to the Los Angeles Daily News. The probe focuses on potential violations of state unfair competition law, examining reported settlement delays, underpayments, denials, and a refusal to pay for testing and remediation of lead and other contamination in standing homes.
Farmers spokesperson Carly Kraft defended the company in comments to the Daily News, stating that Farmers operates in accordance with applicable laws and regulations and does not believe the inquiry accurately characterizes its practices. Kraft added that the company will cooperate through the appropriate process.
Impact on Wildfire Survivors
The Eaton and Palisades fires broke out on January 7, 2025, killing 28 people and destroying more than 16,000 homes and businesses. Joy Chen, executive director of Every Fire Survivor’s Network, stated at the county news conference that insurance had become a barrier to recovery rather than a safety net for families holding State Farm policies.
A report by The Real Deal noted that out-of-pocket construction costs and delayed insurance payouts continue to stall rebuilding efforts across affected neighborhoods like Altadena and Pacific Palisades. The county’s legal actions seek full restitution for policyholders and civil penalties against the insurers for violating state law.
Keep reading