By Marina Peña, CALIFORNIA POST
Los Angeles County has launched a “historic” lawsuit against State Farm alleging the insurance giant mishandled wildfire survivors’ claims.
The bombshell suit, filed Monday, alleges the company violated California’s competition and false advertising laws in its handling of claims from Eaton and Palisades fire victims.
LA County Supervisor Kathryn Barger said recovering from the wildfires has been especially difficult for families who still have their damaged homes. “Many of them have lamented that they wish their homes had burned,” she said.
Victims say the’ve experienced delays in processing claims and payments, changes in insurance adjusters, underpayments, partial payments and serious problems with smoke damage claims.
The delays, according to Barger, have led these families to spend hundreds in temporary housing.
“State Farm has unjustly ignored this group of survivors, leaving them overwhelmed and frustrated,” Barger said.
The supervisor noted the county’s legal investigation into more than 500 complaints and documents provided by State Farm policyholders as evidence.
“State Farm took the premiums. Now they must honor the policies. No more runaround. No more unnecessary delays. No more making survivors fight for what they are owed,” fellow LA County Supervisor Lindsey Horvath added.
This comes the same day Pacific Gas and Electric Company and Edison International shares plunged nearly 20% and 24%, respectively, after California Democrats gutted Gov. Gavin Newsom’s proposal, which sought to change who pays when utility equipment sparks catastrophic wildfires.
The plan would have blocked insurance companies from suing utilities to recover some of their wildfire losses — a move insurers fiercely opposed.
California is also pursuing legal action against State Farm, seeking millions in penalties.
The state’s suit was filed after an investigation found the insurance company didn’t immediately investigate and underpaid claims for the 2025 fires, according to regulators in May.
Regulators say State Farm violated the law hundreds of times in the 220 cases that they investigated, Insurance Commissioner Ricardo Lara said, according to CNN.
The maximum penalty amount allowed by law would be around $4 million if State Farm is found to be “willful” in violating state law.
Regulators could also decide to temporarily suspend the company’s license, which would disallow the state’s largest home insurer from writing new policies for a year in California.
At the time, State Farm responded by saying it rejected any suggestions it “engaged in a general practice of mishandling or intentionally underpaying wildfire claims” and called the state’s insurance market “dysfunctional.”
The company also stated that it paid out more than $5.7 billion on 13,700 auto and home insurance claims related to the 2025 wildfires.
Joy Chen, an Eaton Fire survivor and executive director of the Every Fire Survivors Network, said her organization began documenting complaints against State Farm within weeks of the fires after noticing stark differences in how quickly families were able to begin recovering depending on their insurer.
Chen said the group created separate online channels for survivors to discuss their experiences with individual insurance companies.
“By February, it became obvious that whether a family was starting to recover or not depended largely on which insurance company they had, and State Farm was by far the worst,” Chen said.
The Every Fire Survivors Network began collecting firsthand accounts from policyholders and initially brought its findings to California Insurance Commissioner Ricardo Lara, Chen said. She accused Lara’s office of failing to take effective action in response to the complaints.
In November, Chen said she brought the information the organization had gathered — at the time involving hundreds of cases — to Los Angeles County Supervisor Kathryn Barger. According to Chen, the county launched an investigation within two weeks.
The organization has since collected roughly 1,600 firsthand accounts alleging misconduct by State Farm, Chen said. The group provided that information to Los Angeles County Counsel and helped connect county officials directly with fire survivors.
“We have been continuing to cooperate and provide that information to County Counsel, and connecting them with survivors to provide more information on the problems that they were facing,” Chen said. “Today’s lawsuit is a result of that cooperation.”
Among the most common complaints, Chen said, are prolonged claims delays and policyholders repeatedly being assigned new adjusters.
“There are people who have had 10 or 12 adjusters since the fire,” Chen said. “It’s like Groundhog Day. You have to start all over again.”
Chen said the constant turnover can force survivors to repeatedly explain their claims, even after believing they had reached an agreement with a previous adjuster.
“This is really important because State Farm is the largest market player in California and the largest market player in America,” Chen said. “When the largest market player is systemically not fulfilling their contracts, that creates downward pressure on the entire market.”
Chen did not experience those insurance problems herself. Her home suffered smoke damage during the Eaton Fire, and she said her insurer, USAA, quickly paid her claim. Even so, the displacement took a toll on her family.
“We still had to move nine times with two teenage girls and two cats,” Chen said. “It was very chaotic.”
Chen said her family has been back home since May 2025, but she remains concerned about other survivors who are still displaced and struggling financially.
“I’m also so heartbroken and so frustrated that two thirds of LA fire survivors are still not home,” Chen said. “Retirement savings are drained, credit cards are maxed, and more than half of people will be running out of housing funds within the next six months.”
She called the county’s action “an important step to finally holding State Farm and other insurance companies accountable.”
Jeremy Padawer, who lost his home in the Palisades fire, said he welcomed efforts by Los Angeles officials to hold State Farm accountable.
“I’m glad to hear that the city is strongly working with insurers who are underperforming, because I believe at the end of the day that we hire the city leaders to work on their constituents’ behalf,” Padawer said.
Still, Padawer said he remains deeply frustrated with the broader government response to the disaster and the pace of rebuilding. He is suing the city and the state.
Padawer and his family were forced to move several times after losing their home before eventually finding a more permanent place to stay. They are now rebuilding in the Palisades.
“It’s something that no one should have to deal with,” he said. “My focus is really on the city and the state and their gross negligence and their lack of accountability and their lack of helping people move back faster.”
Padawer also criticized state and local taxes associated with rebuilding, arguing that officials should waive them for fire victims. He added that officials have yet to do anything meaningful.
“The jury is out whether this is something or not, but at least it’s something more than nothing,” Padawer said. “Almost everything that we’ve asked for as a community has fallen on deaf ears.”
He said his criticism was not driven by partisan politics.
“None of this is about politics,” Padawer said. “It is all about operations and about accountability. I just want people who are willing to say, ‘We’ve made a mistake. We are going to fix it by doing the following things so that it doesn’t happen again.’”
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