State Farm is under scrutiny once again as Los Angeles County’s top attorney has announced a civil investigation into the insurance company’s handling of claims related to the Eaton and Palisades fires. The investigation focuses on potential violations of California’s unfair competition law, which aims to protect consumers from unlawful business practices. County Counsel Dawyn Harrison emphasized the commitment to ensuring that State Farm treats claimants fairly and meets legal obligations in claims resolution.
This investigation adds to existing concerns about State Farm’s practices, as it is already involved in a state probe regarding similar issues. Many fire survivors have voiced frustrations over the slow pace of claim processing. The Eaton Fire Survivors Network described the county’s investigation as a significant move for both local fire survivors and all Californians who expect fair treatment from their insurers after paying premiums for protection.
A third-party survey revealed that customers have experienced increased instances of claims being denied, lowball estimates for damages, inadequate communication, and difficulties with multiple adjusters. Earlier this year, State Farm secured a significant emergency rate hike, claiming financial distress and projecting over $7 billion in claims due to January’s fire incidents. This situation became more apparent in July when a nearly $900,000 check for a resident in Altadena was delayed due to insufficient funds.
In response to the investigation, State Farm stated that it has been cooperating with the California Department of Insurance and expressed uncertainty about the goals of the county’s investigation, suggesting it could be a distraction from their ongoing efforts to assist customers affected by the fires. The county counsel has demanded specific claim information from State Farm, outlining concerns about various alleged issues, such as the timeliness of communications, inconsistent adjusters leading to delays, misrepresentation of policy terms, and failures in reimbursing survivors for living expenses as well as addressing smoke damage adequately.
State Farm has until November 20 to respond to the county’s demands. As the largest private insurance provider in California, managing over 2.8 million residential and commercial policies, the outcome of this investigation could have significant implications for insurer accountability and consumer protection in the state.