Los Angeles County has taken California’s largest home insurer to court over the way it handled claims from the January 2025 fires.
The suit, filed in Los Angeles Superior Court and announced by County Counsel on August 31, 2026, alleges that State Farm General engaged in unfair business practices in its handling of Eaton and Palisades fire claims: delaying payments, underpaying, improperly denying claims, suppressing smoke-damage claims and repeatedly reassigning adjusters so that policyholders had to start over. The county is seeking restitution for affected residents and civil penalties of up to $2,500 per violation under California’s Unfair Competition Law.
“We tried this the nice way,” said Supervisor Lindsey Horvath, whose district includes the Palisades. County Counsel Dawyn R. Harrison said the county is “committed to holding State Farm accountable and making sure claimants are treated fairly.”
What the state found first
The county’s case builds on a California Department of Insurance market conduct examination published in May 2026. That exam reviewed 220 randomly selected claims and found 398 violations affecting 114 of them, and the department alleges 432 violations in total once consumer complaints are included.
State Farm General holds more than 2.8 million residential and commercial policies in California. After the fires it received a 17% emergency interim rate increase on homeowners policies, approved on the condition that it demonstrate improved claims handling.
State Farm’s position
The insurer says it “strongly disagrees” with the county’s characterization. Per Claims Journal, State Farm has handled roughly 13,700 fire claims from the two events, paid more than $6.2 billion, including about $1 billion for smoke damage, and closed about 78% of claims.
The fires killed 31 people, destroyed more than 16,000 structures and produced roughly $40 billion in insured losses, the costliest wildfire event in US history.
Why it matters beyond Los Angeles
Smoke damage is the fault line. Homes that did not burn but sat in the plume for days were covered on paper, and the dispute is over what a full remediation costs and whether insurers were entitled to cap it. Whatever the court decides will shape how every carrier handles the next wildfire-adjacent claim.
If you are choosing a policy in a wildfire state, the claims record matters as much as the price. Our home insurance ranking weights J.D. Power satisfaction and complaint data for exactly that reason.