California Pursues Millions in Penalties, State Farm License Suspension

California's top insurance regulator announced on Monday that the state is pursuing millions of dollars in penalties and a potential one-year suspension of State Farm's license to sell policies, following an investigation that uncovered nearly 400 violations of state law in the company's handling of claims from January 2025 wildfires in the Los Angeles area.

Insurance Commissioner Ricardo Lara stated that the Department of Insurance examined 220 randomly selected claims filed with State Farm, California's largest home insurer, and identified violations in about half of them. The probe, launched in June 2025 after complaints from fire survivors, focused on the Palisades and Eaton fires, which killed 31 people and destroyed more than 16,000 structures on and around January 7. State Farm received approximately 11,300 residential claims from the fires, representing nearly one-third of all claims filed statewide.

The violations included delays in processing claims, underpayments to policyholders, inadequate investigations, unreasonably low settlement offers, and failures to provide timely responses or a consistent point of contact. Regulators also cited mishandling of smoke damage...