CALIFORNIA – California Department of Insurance (CDI) commissioner Ricardo Lara announced June 12, that it launched a formal investigation into State Farm’s handling of insurance claims from Palisades and Eaton wildfire survivors.

CDI has initiated a Market Conduct Examination of State Farm, expanding its ongoing investigation into consumer complaints against the insurer.

“While there are national standards for insurance claims handling, they can be vague and inconsistently applied, especially during large-scale, climate-driven disasters,” said Lara.

He continues that the review will evaluate State Farm’s compliance with California’s consumer protection laws and will help determine if further reforms are needed as natural disasters increasingly disrupt insurance markets across the country.

Market Conduct Examination

A Market Conduct Examination is one of the department’s tools, involving a review that typically takes several months. 

The Department is now at a stage in the wildfire claims process that enables a more comprehensive regulatory review.

Insurers are now making payment decisions, enabling the Department to evaluate adjuster practices and assess State Farm’s methods of claims handling.

Urges wildfire survivors facing delayed payments to file formal complaint

Assemblymember John Harabedian (D-Pasadena) said he has received numerous complaints from neighbors regarding the claims process.

While the department has received general allegations regarding State Farm’s processing of claims, a formal complaint is needed for the Department to take action.

“Some troubling patterns that my staff will investigate include the frequent reassignment of multiple adjusters with little continuity in communication, inconsistent management of similar claims, and inadequate record-keeping or information-sharing among claims teams,” said Lara.

He goes on to urge any wildfire survivor facing delayed payments, claim disputes, multiple adjusters, smoke damage issues, or any other problems to file a formal complaint with CDI.

Complaints can be submitted at insurance.ca.gov or by calling 800-927-HELP.

Lara concerned about handling of smoke damage claims

Since January, the department has already recovered more than $40 million for survivors of the Eaton and Palisades fires through its intervention on formal consumer complaints. 

As of May 12, 2025, insurance companies have paid out nearly $17 billion to residential and commercial insurance policyholders impacted by these fires.

Lara said one area of growing concern relates to how some insurers, including State Farm, are handling smoke damage claims.

The urban impact of these wildfires has caused inconsistent insurance handling, leading to confusion and delays for homeowners.

In response to concerns over how smoke claims are being handled, Lara announced the creation of a Smoke Claims & Remediation Task Force last month, bringing together public health experts, remediation specialists, and consumer advocates to develop fair and consistent standards for smoke remediation.