Lara launches investigation into State Farm's handling of wildfire claims

California Insurance Commissioner Ricardo Lara announced today a formal investigation into State Farm's handling of thousands of insurance claims from wildfire survivors affected by the Palisades and Eaton wildfires.

The California Department of Insurance has initiated a Market Conduct Examination of State Farm General Insurance Company, expanding its ongoing investigation into consumer complaints against the insurer.

"Californians deserve fair and comprehensive treatment from their insurance companies.," Lara said. "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. While there are national standards for insurance claims handling, they can be vague and inconsistently applied, especially during large-scale, climate-driven disasters. This examination will assess whether State Farm has complied with California's consumer protection and claims handling laws and will help determine if further reforms are needed as natural disasters increasingly disrupt insurance markets across the country."

A Market Conduct Examination is one of the Department's most effective tools, involving a thorough, fact-based review that typically takes several months. The department is currently at a different stage in the claims process for these wildfires, which allows for a more comprehensive regulatory review for an examination of this magnitude and importance. Insurers are now making payment decisions, enabling the department to evaluate adjuster practices and thoroughly assess State Farm's methods across a wide range of claims handling.

"Following the Eaton Fire, our community deserves clear communication and fair treatment to facilitate a swift rebuilding process," said Assemblymember John Harabedian. "I have received numerous complaints from neighbors regarding the claims process. A market conduct examination will provide the clarity we urgently need. I am grateful to Commissioner Lara for taking action to demand transparency and ensure that families receive the answers they deserve."

While the department has received general allegations from wildfire survivor groups regarding State Farm's processing of claims, a formal complaint is needed for the department to take action and advocate for consumers. Complaints can be submitted at insurance.ca.gov or by calling (800) 927-HELP.

"Some troubling patterns that my staff will investigate include the frequent reassignment of multiple adjusters with little continuity in communication, inconsistent management of similar claims and inadequate record-keeping or information-sharing among claims teams," Lara said. "These issues create unnecessary stress, prolong recovery, and erode trust. The strongest evidence we can present is the voice of consumers themselves. I urge any wildfire survivor facing delayed payments, claim disputes, multiple adjusters, smoke damage issues, or any other problems to file a formal complaint with my department."

Since January, the department has already recovered more than $40 million for survivors of the Eaton and Palisades fires through its intervention on formal consumer complaints. As of May 12, 2025, insurance companies have paid out nearly $17 billion to residential and commercial insurance policyholders impacted by the Eaton and Palisades Fires.

One area of growing concern relates to how some insurers, including State Farm, are handling smoke damage claims. The unprecedented urban impact of these wildfires has created new challenges and a lack of consistency as to how insurance companies are handling these claims — leading to confusion and delays for homeowners.

In response to concerns over how smoke claims are being handled, Lara announced the creation of a Smoke Claims & Remediation Task Force last month, bringing together public health experts, remediation specialists, and consumer advocates to develop fair, science-based and consistent standards for smoke remediation.

"Californians deserve to return to homes that are truly safe, not forced to handle smoke, soot and ash on their own," Lara said. "Our goal is to close the protection gap and make sure insurance works the way it is supposed to, especially in the face of climate-intensified disasters."

Lara's action is part of a multi-pronged effort to expand insurance options for consumers and require more accountability for all companies in the insurance market. A strong, accountable insurance market supports recovery from wildfire and other climate-driven risks.