Friday, November 14, 2025
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L.A. County Counsel Announces Investigation Into State Farm’s Handling of Fire Claims
By a MetNews Staff Writer
Los Angeles’ Office of County Counsel yesterday announced that it has launched an investigation into State Farm General Insurance Company’s handling of claims filed by policyholders affected by January’s Eaton and Pacific Palisades fires, saying the move was prompted by residents’ complaints of unwarranted delays, underpayments, and denials by the state’s largest insurer.
In a letter sent to the insurance giant yesterday, attorneys representing the nation’s most populous county wrote:
“The Affirmative Litigation and Consumer Protection Division of Los Angeles County’s Office of the County Counsel…is hereby notifying you that it has commenced a civil investigation of potential violations of California’s Unfair Competition Law (Cal. Bus. & Prof. Code § 17200 et seq.) by State Farm General Insurance Company…related to State Farm’s failure to comply with various state insurance laws and regulations in its handling of insurance claims arising out of the January 2025 Eaton and Palisades wildfires…in Los Angeles County.”
Specifically, the office cited allegations that State Farm might have failed to adequately address complaints by residents affected by the fires, in violation of provisions of the Code of Regulations indicating that an insurer must respond to communications within 15 days and accept or deny a claim within 40 days, and announced an investigation into whether it has “engaged in a practice of switching adjustors” on claimants, delaying resolution.
The Office of County Counsel said it is also looking into whether the insurer has failed to provide compensation for reimbursement for living expenses, as required by the Insurance Code, as well as investigating whether the company has fallen short in payments covering testing for smoke damage or for remediation to homes left standing after the fires.
State Investigation
Yesterday’s announcement follows last summer’s initiation of an investigation by California Insurance Commissioner Ricardo Lara into whether the company has complied with state consumer protection and claim-handling laws.
The Office of County Counsel is authorized to commence its inquiry under Business and Professions Code §17204, which provides that “[a]ctions for relief pursuant to this chapter shall be prosecuted exclusively in a court of competent jurisdiction by the Attorney General or a district attorney or by a county counsel.” The statutory scheme provides for the recovery of restitution, civil penalties of up to $2,500 per violation, and injunctive relief.
In a case initiated by the Office of County Counsel, any civil penalties collected would go to the cash-strapped county, which has projected a $1 billion deficit for the 2025-26 fiscal year.
Citing an October survey by Embold Research, which found that State Farm customers have reported inferior experiences when compared to policyholders with other insurance companies, the county said in a press release:
“Third-party surveys have found widespread frustration with State Farm’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 devastating Eaton and Palisades Fires.”
County Counsel Dawyn Harrison said of the investigation:
“We 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.”
Smoke-Damage Claims
Residents have expressed particular frustration over State Farm’s handling of smoke-damage claims, an issue that might be complicated by a February decision by Div. Two of this district’s Court of Appeal.
In Gharibian v. Wawanesa General Insurance Company, the court held that a policy providing coverage for “direct physical loss to property” did not cover ash, smoke, and soot damage where the plaintiffs had not shown a persistent alteration to the property.
State Farm made an unprecedented request for emergency rate hikes earlier this year, after claiming financial distress caused by an anticipated $7 billion aggregate payout related to the Los Angeles County fires. In May, Lara approved a 17% premium increase for homeowners.
A spokesman for State Farm responded to an MetNews inquiry, saying:
“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. 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.”
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