State Farm violated law, CA investigation finds

Key Points:

• California’s Insurance Department alleges State Farm committed hundreds of violations in handling claims from last year’s Los Angeles County fires, potentially resulting in millions in fines and a temporary license suspension.
• The investigation found State Farm delayed, underpaid, and complicated claims processing, affecting 52% of 220 claims reviewed, with penalties ranging from $2 million to $4.3 million if violations are confirmed.
• State Farm disputes the allegations, calling the department’s actions politically motivated and warning that a suspension could harm California’s homeowners insurance market.
• The state’s insurance commissioner will review the administrative law judge’s ruling after a hearing, which has not yet been scheduled, to decide on penalties and possible license suspension.
• The potential suspension raises concerns about continuity of coverage for State Farm’s California customers, with the insurance department acknowledging the unprecedented challenges posed by the scale of the fires and the company’s market share.