LA County launches investigation of State Farm over handling of wildfire claims

Los Angeles County has launched an investigation into State Farm’s handling of insurance claims, amid widespread complaints of delays and underpayments from policyholders impacted by the January Eaton and Palisades fires, county officials announced on Thursday, Nov. 13.

The County Counsel’s investigation is focusing on “potential violations” of California’s Unfair Competition Law and is asking for complete records of claims, denial letters, and memos from adjustors. The county warns that any destruction of records would be considered “a violation of the law” that could bring about “adverse consequences,” according to the county’s letter to State Farm.

The investigation comes on the heels of growing complaints from residents about delays lasting nearly a year, replacement payments that don’t cover the cost of building a new home that have stymied recovery efforts, and outright denials of legitimate wildfire claims.

Officials said Thursday that the county has formally notified State Farm — the largest insurer in the state — to cease “any unlawful or unfair business practices.”

Such an investigation could be a precursor to a lawsuit. It’s standard practice to first investigate, gather evidence, before moving ahead with a case, explained Scott Kuhn, assistant county counsel who signed the letter dated Nov. 13.

“We hope our letter that we sent to State Farm will break the log jam and get claims settled quickly,” said Kuhn on Thursday. “And we are hoping they will provide adequate responses to our questions and hopefully, we’ll hear back from them.”

The county is asking that all documents requested related to claims from victims of the January wildfires from all areas, both in the Palisades, a part of the City of Los Angeles, and unincorporated areas of the county, such as Altadena, be returned by Nov. 20.

“Time is of the essence,” Kuhn said. “People are out of their houses. It is a time emergency that is really crucial.”

State Farm responded to an inquiry by this newspaper asking the insurance company about the investigation from the L.A. County Office of County Counsel with the following written statement:

“The goals of this investigation are unclear but what is clear is that it will be another distraction from our ongoing work in California to help our customers recover from this tragedy,” began the emailed statement.

“State Farm is committed to paying customers what they’re owed. We’re handling over 13,500 claims and have paid almost $5 billion to California customers affected by the January wildfires. Nearly 200 Claims professionals are still on the ground, supported by teams nationwide, helping customers recover. We’re here every step of the way and working with elected officials to build a more sustainable insurance market in California,” the statement said.

But many who lost homes or can’t go back to standing homes because they didn’t get enough insurance money for remediation, say State Farm has not been responsive.

Some railed on State Farm, which with more than 2.8 million residential and commercial policies statewide, is California’s largest private insurer.

Jill Spivack, a Palisades resident whose home burned in the fire, said she’s been a loyal State Farm customer for the past 25 years. She thought their loyalty to State Farm would protect them during the recovery process.

“We trusted their promise to help us rebuild, like a good neighbor,” said Spivack. “But what we faced instead is confusion, lowball estimates and a delay at every turn.”

Joy Chen, executive director of the Eaton Fire Survivors Network, said that fire survivors’ experience is “a warning for every Californian who pays insurance premiums and expects the companies that they’ve been paying for 20 or 30 years to honor their contracts.”

On Thursday, she touted county’s response as a major step forward. “After ten long months of delays, denials, and heartbreak, we are grateful to Supervisor Kathryn Barger for demanding accountability from State Farm,” Chen said.

“The EFSN has documented over 400 firsthand accounts from Eaton and Palisades fire families that reveal a clear pattern of misconduct by State Farm,” Chen said. She said 70% of insured Los Angeles fire survivors report that delays and denials are derailing their recovery.

County officials said third-party surveys have found frustration with State Farm’s treatment of claims, with many leading to undue claim delays and underpayments, even denials.

Some say it has slowed the process of rebuilding in the area, as many have had a hard time starting that process without their claims being resolved.

“Altadena residents have already endured unimaginable loss and they shouldn’t have to fight their own insurance company to recover,” L.A. County Board of Supervisors Chair Kathryn Barger said in a written statement. “The County has heard loud and clear from wildfire survivors that State Farm’s delays are standing in the way of rebuilding. Fair and timely insurance payments aren’t a privilege; they’re a right. State Farm must act quickly so survivors can rebuild their homes and their lives.

“For months, survivors have pleaded with the state to act,” Chen said.

Last week, Eaton and Palisades fire survivors formally called for California Insurance Commissioner Ricardo Lara to resign after a report revealed what it said were loopholes in a 2023 plan that resulted in more policyholders being dropped ahead of January’s disasters.

Lara released a statement on Thursday regarding L.A. County’s investigation into State Farm and its handling of wildfire claims, saying the action is similar to an investigation began by his office in June. He did not comment on calls for his resignation.

“These allegations mirror issues the department is investigating in response to complaints about State Farm received directly from wildfire survivors. The department launched an expedited and thorough market conduct examination in June and we will release our findings publicly as soon as they are ready.

“We have a shared goal: We want people to recover on their own terms. And we want insurance companies to pay claims fairly and quickly,” Lara added.

Lara said his department has recovered more than $144 million for Los Angeles wildfire survivors thanks to the department’s response to complaints. “To date, insurance companies have paid more than $20 billion on more than 41,800 claims, with 92% of claims fully paid or underway,” he said.

However, survivors from the Eaton Fire Survivors Network at a recent gathering at Good Neighbor Bar in Altadena, sounded off on the New York Times report, which detailed how the deal between Lara and insurers changed the insurance landscape. Along with the call for Lara’s job, they requested immediate aid from Newsom as they navigate recovery and face barriers from insurers.

An October 2025 survey by Embold Research for the nonprofit Department of Angels, State Farm customers have had far worse experiences than customers of other insurers, reporting much higher rates of claim denials, lowball claims estimates, poor communication, and multiple adjusters being assigned to their claims. The survey noted the urgent need to resolve claims quickly as displacement coverage will be running out soon for many survivors who must either return home or find other housing,” according to the county’s announcement.

The group Consumer Watchdog, on Thursday affirmed the county’s investigation into State Farm’s handling of January wildfire claims, calling it “a vital step to protect wildfire victims.” The group said it has received numerous complaints from consumers about insurers, including State Farm, underpaying homeowners or denying claims.

“The county’s investigation finally gives fire victims a chance at real accountability and relief,” the group said.

In a February release, State Farm officials said “we look forward to working alongside regulators, policymakers and industry leaders on creating a sustainable insurance environment in California – one that balances risk and increased rates, ensures long-term market stability and allows insurers like SFG to remain a vital part of California’s future.”

But local officials said a crucial part of the process is the insurer’s duty to pay out its claims.

“Los Angeles County residents have paid State Farm millions in premiums over many years, and the company has a clear obligation to honor its policies in full,” said Supervisor Lindsey P. Horvath in a statement. “Families who lost everything in the Palisades and Eaton Fires deserve fair and timely treatment — not delays, denials, or underpayments. It’s time for State Farm to live up to its commitment to be a ‘good neighbor’ and do right by its customers who have lost so much.”

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