Los Angeles County attorneys Thursday launched an investigation into State Farm over their handling of insurance claims filed by policyholders affected by January’s wildfires following growing complaints from residents about delays, underpayments and denials of legitimate claims.
The investigation is expected to focus on potential violations of California’s Unfair Competition Law. County Counsel stated that it has formally notified State Farm, the largest insurer in California, that if it is engaging in any unlawful or unfair business practices, the company must immediately stop such conduct and follow state laws.
County Counsel is empowered by statute to investigate and prosecute violations of the Unfair Competition Law on behalf of the residents, and seek restitution, civil penalties and injunctive relief for any violations.
“Altadena residents have already endured unimaginable loss and they shouldn’t have to fight their own insurance company to recover,” according to a statement from LA County Board of Supervisor Chair Kathryn Barger, who represents Altadena. “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,” Barger added.
County attorneys sent the insurer a letter, seeking information and documentation on its business practices such as the use of rotating adjuster tactics, misrepresentations of coverage, payments for smoke damage, additional living expense, refusal to disclose estimates and inspection results upon request, as well as the use of artificial intelligence tools in review of claims.
Third-party surveys found widespread frustration with the insurer’s treatment of claims, with far too many residents facing undue claims delays, underpayments and denials that compound their hardship and loss in the
aftermath of the fires, according to county officials.
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, an October survey, conducted by Embold Research for the nonprofit Department of Angels, found.
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.
“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 Horvath, who represents Pacific Palisades. “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.”
The insurer has more than 2.8 million residential and commercial policies .
County Counsel Dawyn Harrison added they are committed to thoroughly investigating State Farm’s actions and making sure they are “treating claimants fairly and resolving their claims quickly and in full compliance with the law.”
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,” according to a statement from State Farm.
“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,” the statement continued. “We’re here every step of the way and working with elected officials to build a more sustainable insurance market in California.”
State Farm launched a fire recovery webpage earlier this year as a way to inform policyholders and others about the effort they’ve taken in response to Palisades and Eaton fires.
Homeowners non-renewals in LA County were paused by the insurer following the fire emergency. Any homeowners’ policies which had pending non-renewals in the county that were on the books on Jan. 7 will have an option to renew with State Farm General.
Joy Chen, executive director of the Eaton Fire Survivors Network, hailed county officials for initiating a probe into State Farm’s handling of claims.
“After 10 long months of delays, denials, and heartbreak, we are grateful to Supervisor Kathryn Barger for demanding accountability from State Farm. Her leadership gives survivors hope that recovery — long stalled by
insurer misconduct — can finally move forward,” Chen said in a statement.
For months, survivors had urged state officials to act. The organization — whose members consist of Altadena residents and some from Pacific Palisades — documented more than 400 firsthand accounts from fire survivors, which they say reveal a “clear pattern of misconduct” by the insurer.
Last week, members of the network conducted a news conference to urge California Insurance Commissioner Ricardo Lara to resign for what they describe as his failure to hold insurers accountable. The group also called on Gov. Gavin Newsom to install a new commissioner who will rebuild an insurance system.
“In the absence of state leadership, today’s county investigation is a major step forward. It matters not only for Los Angeles fire survivors, but for every Californian who pays premiums and expects the protection they paid
for when disaster strikes,” Chen said in her statement.
Consumer Watchdog, a nonprofit, nonpartisan organization advocating for taxpayers, commended the county for opening the civil investigation into State Farm, calling it a “vital step to protect wildfire victims.”
“Many wildfire survivors have been waiting for nearly a year for help that hasn’t come,” Carmen Balber, executive director at Consumer Watchdog, said in a statement. “The county’s investigation finally gives fire victims a
chance at real accountability and relief.”
The organization says it received “voluminous complaints” from consumers that their insurers, including State Farm, have delayed, tried to underpay or outright denied their claims.
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