California Moves To Suspend State Farm Over Wildfire Claims

California‘s insurance commissioner wants to see State Farm’s license to do business in the state suspended for up to a year, with the insurer coming under fire for its handling of claims from the 2025 wildfires.

California Department of Insurance Commissioner Ricardo Lara filed a stipulation calling for the up-to-one-year suspension, as well as a fine of up to $10,000 per violation, against State Farm General Insurance Co., after an investigation found “significant mishandling of insurance claims.”

The state is seeking millions of dollars in penalties, Lara said. The filing requires State Farm to take corrective action to speed up claims and payments. The filing, called an Accusation and Order to Show Cause, alleges violations of the state’s Unfair Insurance Claims Practices Act.

It’s a first step before the company must appear before an administrative law judge.

“Wildfire survivors came to us for help, and we followed the facts,” Lara said in a statement. “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.”

State Farm didn’t immediately respond to a request for comment.

The Palisades and Altadena fires in January 2025  destroyed 16,000 structures, including 12,000 homes, causing upward of $131 billion in property and capital losses. And there has been plenty of finger-pointing since then. Residents are frustrated by the slow pace of cleanup, and politicians in Washington and Sacramento have accused one another of malfeasance.

State Farm policyholders filed 11,300 residential claims from the wildfires, accounting for as many as a third of the 38,835 claims filed from the fires. Lara said in a statement the firm has been a frequent subject of complaints from survivors.

A state investigation of 220 claims found a total of 398 violations, including slow investigations, underpayment of claims, confusion, denials, and poor communications. California wants penalties for those violations, plus an additional 34 based on consumer complaints.

The state Legislature is considering several bills to change its insurance business and require more consumer-friendly practices from insurers.

“Survivors deserve a fair, timely recovery, not obstacles and delays,” Lara said. “We are taking a two-pronged approach: legal action to address State Farm’s conduct, and legislative action to ensure this does not happen again.”

Tristan Navera is a senior reporter on housing policy, covering trends and solutions in the housing market from Washington, DC. He was previously a senior reporter at Bloomberg Law, and before that covered real estate for the Washington Business Journal. Earlier in his career, he spent a decade reporting on business and real estate in Dayton and Columbus, OH. A Cincinnati native, he holds a journalism degree from Ohio University.