Los Angeles County announced that it filed a lawsuit Monday against the state largest insurance provider.
The county alleges in its legal action against State Farm that the insurer engaged in unfair business practices after the January 2025 wildfires in Altadena and Pacific Palisades. The allegations detailed in a 100-page complaint include widespread mishandling of claims by policyholders that left many homeowners unable to return to their neighborhoods and rebuild.
“Wildfire survivors have spent far too long fighting to receive the benefits they paid for and counted on,” county Supervisor Kathryn Barger said at a downtown news conference announcing the legal action. “Survivors have reported deep delays in processing claims and payments, repeated changes in adjustments, sometimes up to 10 to 15, underpayments and partial payments, inconsistent handling of additional living expenses and serious problems with smoke damage claims.
The Los Angeles Superior Court lawsuit specifically alleges that State Farm violated California’s unfair competition and false advertising laws, according to County Counsel Dawyn Harrison.
“The lawsuit alleges that State Farm engaged in unfair, unlawful and deceptive business practices that harm their policyholders,” Harrison said. “The lawsuit seeks injunctive relief to stop State Farm from these unfair and unlawful practices and fulfill their promises to their policyholders. The lawsuit also seeks restitution for policyholders, civil penalties and abatement for alleged ongoing health hazards associated with inadequate testing and remediation.”
State Farm could potentially lose its license for a year after a report found it mishandled claims related to wildfires that affected Altadena and Pacific Palisades. Tracey Leong reports for the NBC4 News at 11 p.m. on Monday, May 4, 2026.
State Farm issued a statement about the county’s lawsuit.
“We will review the lawsuit and respond through the appropriate legal process,” the company said. “Wildfire survivors deserve support, clear answers, and a fair claims process. Insurance practices in California are regulated by the California Department of Insurance, and State Farm cooperated fully with the Department’s review of our wildfire claims response.
“Our focus remains on helping customers recover. State Farm has paid more than $6.2 billion on claims related to the 2025 Los Angeles wildfires, including approximately $1 billion for smoke-related damage, and has closed about 78% of claims. We continue working directly with customers whose claims remain open and evaluating each claim based on the facts of the loss and the coverage provided by the customer’s policy.”
Gita Murthy is among the homeowners who still have not returned to their residences in Altadena. The State Farm policyholder said she was initially grateful her damaged house remained standing after the fire.
“My insurance company has only been approving like month-to-month for my housing,” Murthy said. “And so, it’s just created just so much instability.
“The thing that would make recovery possible would be being back in our home and having some semblance of normalcy in our life. And that hasn’t happened.”
NBCLA reached out to State Farm for a response to Murthy’s specific case. The company said it cannot share details about individual claims, but said the claim is active and they continue to work with the policyholder and adjuster.
The state Department of Insurance filed a lawsuit against State Farm in May that included similar allegations. The state lawsuit, which could potentially lead to State Farm temporarily losing its license to operate in California, does not seek restitution for policyholders, unlike the county lawsuit.