OAN Staff Jenna Lee and Katherine Mosack
11:59 AM – Wednesday, May 6, 2026
A probe by the California Department of Insurance found that State Farm violated state law in its handling of hundreds of Los Angeles County fire insurance claims after wildfires engulfed the area last year.
“Wildfire survivors came to us for help, and we followed the facts. Our investigation found that State Farm delayed, underpaid and buried policyholders in red tape at the worst moment of their lives,” wrote Ricardo Lara, the state’s insurance commissioner, in a news statement on Monday.
The probe found 398 violations of state law in 114 of the 220 sample claims that were examined.
The major violations mirrored complaints submitted by fire survivors. These include slow and inadequate investigation of claims, “unreasonably low settlement offers” for claims, multiple adjusters causing confusion, denials and delays of smoke damage claims and inadequate communication, such as failures to send required letters and notices.
In light of their findings, state regulators are pushing a multimillion-dollar fine and a suspension of State Farm’s license in California.
Douglas Heller, Consumer Federation of America’s Director of Insurance, told the press that although he doesn’t believe State Farm will lose its California license, he still hopes that the company will use this time as a turning point to reform its insurance practices.
“I don’t think it’s a huge chance because hopefully State Farm will get serious and respond to this action in a productive way, meaning changing their practices, getting money back into people’s hands and speeding up their processing of claims,” said Heller.
After an initial hearing, yet to be scheduled, the commissioner will review the administrative law judge’s rulings and decide on any possible license suspension and penalties to be imposed.
If an administrative law judge finds that California’s 430 insurance claims have merit, each violation would be subject to a penalty of up to $5,000, with each willful law violation being subject to a maximum penalty of $10,000.
It is also not clear what would become of State Farm customers if the insurance company receives a one-year suspension, according to Michael Soller, spokesperson for the insurance department.
“Between the scope of the fires and the scope of this company, we’re in pretty unprecedented territory,” said Soller.
In January 2025, wildfires spread across Eaton and the Palisades in Los Angeles, California, burning more than 23,000 acres of land and destroying almost 7,000 structures. The state’s Department of Insurance said it recovered over $280 million from all insurance companies for the survivors, deeming it the most expensive wildfire in the state’s history.
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