Los Angeles County Sues State Farm for Claim Mishandling

Int’l Insurance Desk: Los Angeles County filed a lawsuit on Monday against State Farm accusing the nation’s largest home insurer of systematically mishandling claims stemming from the devastating January 2025 wildfires that tore through Pacific Palisades, Altadena and surrounding communities.

The complaint, lodged in Los Angeles County Superior Court, alleges that State Farm delayed payments, underpaid losses, repeatedly switched adjusters on individual claims, denied benefits owed under policies and in some cases pressured residents to return to homes still contaminated by smoke and toxins.

County officials contend these practices violated California’s unfair competition laws and prolonged the hardship faced by policyholders whose properties were damaged or destroyed.

According to the suit which was reported by Reuters, State Farm’s response fell short of the prompt and reliable service the company had promised, leaving many survivors without the funds needed to rebuild or secure temporary housing.

The county seeks restitution for affected residents along with civil penalties. The action follows an earlier investigation by the County Counsel’s office that reviewed hundreds of complaints and found patterns of delay, underpayment and inadequate handling of smoke-related damage claims.

Officials noted that State Farm handled a substantial share of residential claims from the fires, which killed at least 31 people and damaged or destroyed more than 16,000 structures.

State Farm strongly disputed the county’s characterization of its claims handling.

In a statement the Bloomington, Illinois-based insurer said it has paid more than 6.2 billion dollars on wildfire-related claims for homes, vehicles and other property, including roughly 1 billion dollars for smoke damage, and has closed about 78 percent of the claims.

The company emphasized that it continues to work with customers on remaining open claims and evaluates each one according to the facts of the loss and the coverage in the policy.

It added that it will review the lawsuit and respond through the proper legal channels.

The county’s case comes after California’s insurance commissioner earlier this year sought millions in penalties from State Farm following a market conduct examination that identified hundreds of alleged violations in a sample of claims.

Survivors and local advocates have long complained of slow responses and insufficient payouts in the wake of the Palisades and Eaton fires.