California sues State Farm over wildfire claims handling

California is taking legal action against State Farm after an expedited investigation found mishandling of claims tied to the 2025 Los Angeles wildfires.

The California Department of Insurance reviewed 220 claims and found 398 violations in 114 claims, including delayed investigations, underpayments, inadequate communication, repeated adjuster reassignments, and issues tied to smoke damage claims. State Farm received approximately 11,300 residential claims from the fires, nearly one-third of all claims filed across insurers.

The department filed an Accusation and Order to Show Cause, the first step toward a public hearing before an administrative law judge.

Penalties can reach $5,000 per violation, or $10,000 for willful violations. The department is also requiring corrective actions to speed payments and resolve outstanding claims.

State Farm in response: “Wildfire survivors deserve real solutions – not a distorted picture of State Farm’s response. We strongly disagree with the Department’s characterization. We reject any suggestion State Farm engaged in a general practice of mishandling or intentionally underpaying wildfire claims, and we will respond through the process.

California’s homeowners insurance market is the most dysfunctional in the country, and State Farm has worked to be part of real solutions. The state is facing an availability and affordability crisis, and the California Department of Insurance should take responsibility for regulatory delays and uncertainty that have contributed to fewer choices and higher costs for consumers. The Department’s approach is adding uncertainty to a market that already lacks predictability, discouraging participation and leaving Californians with fewer coverage options when they need them most.

State Farm General insures more than one million homes in the state of California and insured more homes in the affected areas than any other carrier. We handled more than 13,700 auto and homeowners claims, paid more than $5.7 billion to help customers recover, and nearly  200 claims professionals remain on the ground today helping customers rebuild.”