SACRAMENTO, CALIF. — California Insurance Commissioner Ricardo Lara announced that the state is seeking millions of dollars in penalties from State Farm over hundreds of alleged violations of state law in the company's handling of claims from the 2025 Los Angeles-area wildfires. The California Department of Insurance alleges 430 violations and is pursuing the action after an investigation Lara launched in June 2025.

"Our investigation found that State Farm delayed, underpaid, and buried policyholders in red tape at the worst moment of their lives. That is unacceptable, and we are taking decisive action to hold them accountable," Lara said.

The department examined 220 random claims filed with State Farm and found nearly 400 violations, with violations identified in 52% of the claims reviewed. The alleged violations included slow and inadequate claims investigations, underpayment, the assignment of multiple claims adjusters to a single case, and delayed communication with policyholders. According to legal filings, State Farm also denied payments for hygienic testing for toxins in smoke damage claims in violation of law.

In one case, State Farm waited nearly three months before starting to investigate a claim. In another, the company delayed paying a customer for months while internally acknowledging that the payment should have been approved. A separate customer was assigned a dozen claim adjusters within four months, causing confusion. In some cases, the department asked State Farm to reopen claims and correct the identified violations, according to the accusation.

Each violation is subject to a penalty of up to $5,000 if an administrative law judge finds it has merit, and willful violations are subject to penalties of up to $10,000 each. State Farm could owe up to $4.3 million if all alleged violations are found willful. An administrative judge will recommend the final amount of penalties, which will be finalized by Lara after a hearing. Lara will also decide whether to suspend State Farm's certificate of authority for one year.

State Farm received more than 11,000 claims from the Los Angeles wildfires, accounting for roughly one-third of all claims filed, and said in April that it had paid customers more than $5.7 billion in wildfire claims. The company insures about one-fifth of California property owners. The Palisades and Eaton fires led to the deaths of 31 people and destroyed more than 16,000 structures.

"Between the scope of the fires and the scope of this company, we're in pretty unprecedented territory," said Michael Soller, a spokesperson for the Insurance Department. State Farm is the second insurance company to face legal actions from the state over its handling of the fire claims.

The department is also seeking remedies against the FAIR Plan, an insurance pool funded by major private insurers that issues policies to property owners unable to obtain private coverage, for denying smoke damage claims.