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California’s Department of Insurance is taking a closer look at how State Farm General Insurance Company handled claims tied to the Eaton and Palisades wildfires. On Thursday, the Department informed Inman that it has launched an investigation into the insurer’s conduct.
Ricardo Lara | California Insurance Commissioner
Insurance Commissioner Ricardo Lara said in a statement that the Market Conduct Examination will determine whether State Farm complied with California’s consumer protection and claims handling laws, and whether any reforms are necessary. The review is expected to take several months.
“Californians deserve fair and comprehensive treatment from their insurance companies,” Lara said in the statement. “No one should be left in uncertainty, forced to fight for what they are owed, or face endless delays that often lead consumers to give up.”
The timing of the review is critical as insurers are now finalizing wildfire-related payouts, giving regulators a clearer picture of how claims have been managed or mishandled so far.
Lara said his team will be looking into several growing concerns.
“Some troubling patterns that my staff will investigate include the frequent reassignment of multiple adjusters with little continuity in communication, inconsistent management of similar claims, and inadequate record-keeping or information-sharing among claims teams,” he said. “These issues create unnecessary stress, prolong recovery and erode trust.”
One of the biggest flashpoints is smoke damage claims. According to Lara, the large-scale impact of the wildfires has led to confusion and inconsistency in how claims are handled. In response, he launched a Smoke Claims & Remediation Task Force to develop science-based standards for remediation.
Lara is urging wildfire survivors who are struggling with their claims, whether due to smoke damage, delays or adjuster issues, to file formal complaints. These firsthand accounts, he said, are often the most powerful evidence regulators can use to take action.
In immediate response to the wildfires, State Farm said its Catastrophe Response Team was deployed to California to help residents recover from the disaster, which claimed at least 29 lives and destroyed roughly 16,000 structures.
Effective April 14, State Farm increased its advance contents payments, under the personal properties portion of policies, to support customers with total losses — now totaling about 2,500 of its policyholders.
“We understand this is a difficult time for our impacted customers, and we’re here to help,” State Farm officials said in a statement. “Our claim handlers are assisting customers with their claims, including the contents inventory.
According to State Farm, the company has received over 12,855 total claims related to the fires and paid out over $3.96 billion as of June 10.
California’s Department of Insurance has helped recover over $40 million for policyholders this year alone through intervention. “Our goal is to close the protection gap and make sure insurance works the way it is supposed to, especially in the face of climate-intensified disasters.”
