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LA County launches investigation into State Farm’s handling of January fire claims
A State Farm insurance sign in rubble from the Palisades Fire on Jan. 16.
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LA County launches investigation into State Farm’s handling of January fire claims
Customers say the state’s largest private insurer is delaying and denying legitimate claims.
State Farm is facing another investigation into its handling of Eaton and Palisades fire insurance claims, Los Angeles County’s top attorney announced Thursday.
The civil investigation is focusing on “potential violations” of the state’s unfair competition law, which prohibits unlawful or unfair business practices, the Office of County Counsel said.
“We are committed to thoroughly investigating State Farm’s actions and making sure they are treating claimants fairly and resolving their claims quickly and in full compliance with the law,” County Counsel Dawyn Harrison said in a statement.
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The decision means State Farm can raise its rates an average 17% for homeowners, 15% for renters and condominiums, and 38% for rental dwellings starting June 1. -
Homeowners want the state to act immediately and intervene more to help them recoup what they're owed from insurance companies. -
A check from State Farm to a Los Angeles fire survivor has taken more than a week to clear so far. A bank is concerned about insufficient funds.
How we got here
The move comes as the insurance giant already is dealing with a state probe into the same issue. Some residents have raised concerns that State Farm isn’t moving fast enough.
“In the absence of state leadership, today's county investigation is a major step forward,” the Eaton Fire Survivors Network said in a statement. “It matters not only for Los Angeles fire survivors but for every Californian who pays premiums and expects the protection they paid for when disaster strikes.”
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Customers have reported much higher rates of denials, lowball claim estimates, poor communication and challenges with multiple adjusters, according to a third-party survey of fire survivors.
State Farm won the first emergency rate hike in the state earlier this year. The company told officials it was in financial distress and expected to pay more than $7 billion in January fire claims.
Signs of that came back in July, when a nearly $900,000 check for an Altadena resident was put on hold because of insufficient funds.
About the investigation
In response to the investigation, State Farm said it has been "cooperating fully" with the California Department of Insurance.
"The goals of this investigation by L.A. County are unclear, but what is clear is that it will be another distraction from our ongoing work in California to help our customers recover from this tragedy," the company said in an update, alongside a list of actions it's taken.
The county counsel has sent State Farm a letter with demands for claim information. It says the investigation is looking at a number of alleged problems, including:
- Timely communications
- Switching adjusters, resulting in delays
- Misrepresenting policy language
- Failing to reimburse survivors’ living expenses
- Failing to disclose estimate documents upon request
- Not reasonably investigating smoke damage or paying for testing and remediation
County officials have given State Farm until Nov. 20 to respond. As California’s largest private insurance provider, State Farm manages more than 2.8 million residential and commercial policies statewide.
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