CA says State Farm violated the law in handling of insurance claims after Eaton, Palisades fires

Key Points:

• The California Department of Insurance (CDI) found that State Farm violated laws by delaying investigations and underpaying claims related to the 2025 Eaton and Palisades wildfires, with around 400 violations identified in a sample of 220 claims.
• Insurance Commissioner Ricardo Lara announced potential penalties of up to $4 million and possible temporary suspension of State Farm’s license to write new policies in California, which would significantly impact the state's largest home insurer.
• State Farm denies intentional wrongdoing, claiming it has paid over $5.7 billion on wildfire-related claims and accusing the CDI of adding uncertainty to California’s already troubled insurance market.
• The investigation highlights ongoing challenges in California’s insurance industry, where companies are raising rates, limiting coverage, or exiting high-risk wildfire areas due to increasing natural disaster risks linked to climate change.
• Governor Gavin Newsom emphasized that the investigation serves as a warning to insurers about improperly delaying or denying claims, while the state also pursues legal actions against other insurers like the FAIR Plan for mishandling wildfire-related claims.