Los Angeles County sued State Farm General Insurance Co. on Monday, alleging widespread mishandling of claims by policyholders in the Eaton and Palisades fire burn zones.
In May, the California Department of Insurance initiated an enforcement action against the company seeking millions of dollars in penalties for a “documented a pattern of unlawful behavior” that resulted in violations affecting thousands of fire survivors.
“Wildfire survivors have already endured unimaginable loss; they should not have to fight their insurance company simply to receive the benefits they paid for and counted on,” Los Angeles County Supervisor Kathryn Barger said in a statement. “These delays, underpayments and denials have real consequences. They keep families from rebuilding, prolong displacement, and ultimately slow the recovery of entire communities. That is why Los Angeles County is taking action to stand up for survivors and hold State Farm accountable.”
At a news conference announcing the lawsuit Monday, Barger said survivors have reported repeated changes in claim adjustment — sometimes as many as 10 to 15 — inconsistent handling of additional living expenses and serious problems with smoke damage claims.
“This is unacceptable,” she said.
According to the lawsuit county attorneys filed in LA Superior Court, State Farm violated the state’s unfair competition and false advertising laws in the handling of claims submitted by Eaton and Palisades fire survivors.
“The lawsuit alleges that State Farm engaged in unfair, unlawful and deceptive business practices that harm their policyholders,” County Counsel Dawyn said in a statement. “The lawsuit seeks injunctive relief to stop State Farm from these unfair and unlawful practices and fulfill their promises to their policyholders. The lawsuit also seeks restitution for policyholders, civil penalties and abatement for alleged ongoing health hazards associated with inadequate testing and remediation.”
A State Farm statement said the company “strongly disagrees with Los Angeles County’s characterization of our wildfire claims response. We will review the lawsuit and respond through the appropriate legal process. Wildfire survivors deserve support, clear answers and a fair claims process.
“Insurance practices in California are regulated by the California Department of Insurance, and State Farm cooperated fully with the Department’s review of our wildfire claims response,” the statement said.
Company officials added that their “focus remains on helping customers recover,” noting payouts so far total $6.2 billion on claims related to the 2025 LA wildfires, including roughly $1 billion for smoke-related damage and the closing of about 78% of claims.
“We continue working directly with customers whose claims remain open and evaluating each claim based on the facts of the loss and the coverage provided by the customer’s policy,” according to State Farm.
The company denied wrongdoing after the Department of Insurance initiated its legal action.
A statement from the company said the state’s case is “a distorted picture of State Farm’s response” to the devastating wildfires that damaged or destroyed tens of thousands of structures and caused 31 deaths.
“California’s homeowners insurance market is the most dysfunctional in the country, and State Farm has worked to be part of real solutions,” according to the company. “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.”
The Insurance Department’s enforcement action could lead to State Farm temporarily losing its license to issue insurance policies in California.
“The threat to suspend State Farm General’s ability to serve customers over primarily administrative and procedural errors is a reckless, politically motivated attack that could ultimately cripple California’s homeowners insurance market,” company representatives said.
According to District 3 Supervisor Lindsey Horvath, “LA 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,” she said in a statement. “Families who lost everything in the Palisades and Eaton fires deserve fair and timely treatment — not delays, denials or underpayments. State Farm must live up to its commitment to be a ‘good neighbor’ and do right by its customers who have lost so much.”
While the state’s action seeks millions in penalties, the county lawsuit seeks financial restitution for fire victims.
Fire survivors “should not have to fight the insurance company to rebuild their lives,” Horvath told reporters.
“These families did their part,” she said. “They paid their premiums month and month, year after year. They trusted that if the worst happened, the protection they paid for would be there. And then the worst happened. Instead of certainty, too many survivors have been left waiting for an answer, for an adjuster, for a fair payment, for the resources they need to rebuild.”
State Farm has handled 13,700 claims from the Los Angeles wildfires, paying over $6 billion, the company reported. Total payments are expected to reach $7 billion.
The County Counsel’s Office is working with the nonprofit Consumer Watchdog and consumer protection attorney Christina Tusan on the lawsuit.
A document detailing the state’s legal action is available online.