Following similar action by the state, Los Angeles County filed a lawsuit on Aug. 31 against State Farm Insurance Company, alleging widespread mishandling of claims by policyholders in the Eaton and Palisades fire burn zones.
“Wildfire survivors have spent far too long fighting to receive the benefits they paid for and counted on,” county Supervisor Kathryn Barger said at a downtown news conference announcing the legal action. Survivors have reported deep delays in processing claims and payments, repeated changes in adjustments, sometimes up to 10 to 15, underpayments and partial payments, inconsistent handling of additional living expenses and serious problems with smoke damage claims. “This is unacceptable,” she said.
The Los Angeles Superior Court lawsuit alleges that State Farm violated California’s unfair competition and false advertising laws in how it handled Eaton and Palisades fire survivors, according to County Counsel Dawyn Harrison.
“The lawsuit alleges that State Farm engaged in unfair, unlawful and deceptive business practices that harm their policyholders,” Harrison said. “The lawsuit seeks injunctive relief to stop State Farm from these unfair and unlawful practices and fulfill their promises to their policyholders. The lawsuit also seeks restitution for policyholders, civil penalties and abatement for alleged ongoing health hazards associated with inadequate testing and remediation.”
State Farm officials did not immediately respond to a request for comment. In May, when the state Department of Insurance sued the insurer over similar allegations, the company denied any wrongdoing. “We reject any suggestion that State Farm engaged in a general practice of mishandling or intentionally underpaying wildfire claims, and we will respond through the process,” according to a statement from State Farm at the time. “Wildfire survivors deserve real solutions, not a distorted picture of State Farm’s response.” The state lawsuit could potentially lead to State Farm temporarily losing its license to operate in California.
The threat to suspend State Farm General’s ability to serve customers over primarily administrative and procedural errors is a reckless, politically motivated attack that could ultimately cripple California’s homeowners insurance market,” State Farm said in its statement responding to the state lawsuit.
The state’s lawsuit seeks millions of dollars in penalties against State Farm. The county lawsuit, meanwhile, more specifically seeks financial restitution for fire victims.
County Supervisor Lindsey Horvath said fire survivors “should not have to fight the insurance company to rebuild their lives.” She said. “These families did their part; they paid their premiums month and month, year after year. They trusted that if the worst happened, the protection they paid for would be there. And then the worst happened. Instead of certainty, too many survivors have been left waiting for an answer, for an adjuster, for a fair payment, for the resources they need to rebuild.”
According to State Farm’s website, the company has handled 13,700 claims from the Los Angeles wildfires, and made more than $6 billion in payments. The company expects total payments to ultimately reach $7 billion.
