Insurance regulators in California have reportedly been seeking to suspend State Farm’s license for allegedly mishandling claims following the devastating 2025 wildfires in Los Angeles.
On Monday, the Department of Insurance announced it will be filing an administrative action against State Farm — California’s largest home insurer — after “an investigation into 220 sample claims found 398 violations of state law in about half of them,” per the Los Angeles Times.
“Our investigation found that State Farm delayed, underpaid, and buried policyholders in red tape at the worst moment of their lives,” Insurance Commissioner Ricardo Lara said in a statement. “That is unacceptable, and we are taking decisive action to hold them accountable.”
Department spokesman Michael Soller added that State Farm has been sent a cease-and-desist order for it to stop engaging in deceptive or fraudulent practices, saying the department will suspend the insurer’s “certificate of authority” for up to a year, disabling it from writing policies:
The department in June 2025 launched a “market conduct exam” into State Farm General — the subsidiary of the giant Bloomington, Ill. insurer that handles California home insurance — after complaints by victims of the fire in Pacific Palisades, Altadena and nearby communities.
It found that the company failed in numerous cases to pursue a “thorough, fair and objective investigation” into claims, failed to come to “prompt, fair, and equitable settlements” and made settlement offers that were “unreasonably low.”
Other alleged violations included a failure to give timely responses to claims, provide a factual or legal basis for claim denials and or give victims a primary point of contact after assigning three or more adjusters in a six-month period.
The department also accused State Farm of not adequately dealing with smoke damage claims from homeowners whose properties survived the fires, refusing abatement and tests for toxins.
State Farm denied being at fault in some of the violations while admitting fault in others, blaming the issue on individual adjusters.
According to PBS, State Farm is now “the second insurance company to face legal actions from the state over its handling of LA fire claims.”
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