[UPDATED] State Farm Accused of Mishandling Hundreds of Wildfire Claims; California Seeks Millions in Penalties

Remains of John Diehl’s former State Farm office in Altadena, which collapsed during the recent wind storm (File Photo – Colorado Boulevard Newspaper)

The California Department of Insurance announced today that State Farm significantly mishandled insurance claims filed by survivors of the 2025 Los Angeles wildfires, citing widespread failures in how the company processed and communicated about those claims.

By News Desk

According to the Department, investigators found slow and inadequate claim reviews, low settlement offers, underpayments, and poor communication with policyholders. The enforcement action now underway seeks millions of dollars in penalties.

Assemblymember John Harabedian of Pasadena responded to the announcement, saying the findings confirm long‑standing concerns raised by wildfire survivors and lawmakers. In his statement, he said the investigation shows that “State Farm is grossly mishandling wildfire claims” and argued that the company’s actions prolonged recovery and pushed families toward financial crisis. He also praised Insurance Commissioner Ricardo Lara for pursuing the case and emphasized the need for full accountability.

The Department’s action includes filing an Accusation and Order to Show Cause against State Farm — the formal first step toward a public administrative hearing. The filing alleges violations of the Unfair Insurance Claims Practices Act and related regulations, including 398 violations identified in a Market Conduct Examination and 34 additional violations stemming from consumer complaints.

Under California Insurance Code Section 790.035, the penalties could reach $5,000 per violation, or $10,000 for willful violations. Final penalties may be imposed by the Insurance Commissioner following the administrative hearing.

State Farm Responds

In a response to our newsroom on Tuesday, May 4, State Farm sent a statement saying wildfire survivors deserve real solutions, not a distorted picture of the company’s response, and that it strongly disagrees with the Department’s characterization. The company rejected any suggestion it engaged in a general practice of mishandling or intentionally underpaying wildfire claims and said it will respond through the appropriate process.

State Farm also said California’s homeowners insurance market is dysfunctional, arguing that regulatory delays and uncertainty from the California Department of Insurance have reduced consumer choice and increased costs. The company added that it insures more than one million California homes, handled over 13,700 claims related to the fires, paid more than $5.7 billion to customers, and currently has nearly 200 claims professionals working on recovery efforts.