Since the January 2025 firestorms damaged or destroyed more than 12,000 homes in Los Angeles County, fire victims have repeatedly complained that insurers have delayed, denied or underpaid many of their claims, with most still displaced.
A year later, state lawmakers have introduced legislation to address those problems.
One bill, authored by newly appointed Senate Insurance Committee Chairperson Steve Padilla, (D-San Diego), and backed by Insurance Commissioner Ricardo Lara, addresses more than a half-dozen problems that have cropped over the past year.
Senate Bill 876 would double penalties during a declared emergency for violations of laws regulating claims practices, and would require insurers to pay restitution directly to policyholders.
It also would double the amount of money insurers would have to pay for living expenses during a disaster while the homes of fire victims are being rebuilt or cleaned up. And it would speed up-front payments to policyholders whose homes have burned down.
The law requires insurers to develop a “disaster recovery plan” for handling mass claims in a timely manner. The plan would have to be reviewed by the Department of Insurance.
“The last 12 months have made clear the urgent need to update and modernize the claim process to better protect homeowners devastated by these wildfires,” said Padilla, in a statement.
Lara has faced criticism from fire victims for not standing up to insurers — a claim he denies. He said in his own statement that, “We will measure success when people can recover without red tape and delays, get coverage on their own terms, and rebuild so they are out of harm’s way in the future.”
“We are closely reviewing the legislation. Insurers are deeply committed to paying claims fairly, promptly, and transparently,” said Denni Ritter, a vice president of the American Property Casualty Insurance Assn., a leading industry trade group active in California.
Two other bills were authored by Sen. Sasha Renée Pérez (D-Alhambra), whose district includes the Eaton fire zone. They were backed by Los Angeles advocacy group Consumer Watchdog and the Eaton Fire Survivors Network, which have called for Lara’s resignation.
The legislation focuses on two of the biggest complaints registered by fire victims: delays in getting claims payments and reductions in settlement offers following higher initial damage estimates by field adjusters.
Senate Bill 877 would require insurers to fully disclose all loss estimate documents and revisions to policyholders with explanations, while identifying those who made the changes.
“I was hearing directly from fire survivors that with the loss estimates they were really getting the run around from adjusters and felt like they were being low balled in many cases when they were finally getting their payout,” Pérez said.
Senate Bill 878would impose automatic 20% interest penalties when insurers delay making payments required by law, including a 30-day deadline to pay undisputed parts of a claim. (Lara’s and Padilla’s bill also includes interest penalties when certain payments aren’t made on time.)
“What we’ve heard from our constituents is that oftentimes, rather than denying the claim, what they’ll do is they’ll just delay and delay and kind of wait out fire survivors who they know are desperate,” she said.
Pérez said she expected the bills to be a “lift” to get enacted but noted that Florida, a more conservative state, has passed similar legislation.
Last year, a host of bills were introduced following the fires, only some of which were enacted due to opposition. Those included a bill making it easier to file claims for personal property losses and a bill requiring mortgage servicers to give victims of fire disasters up to 12 months of mortgage relief, though it included exceptions that have frustrated fire victims.
Among the legislation that did not advance were bills promoting insurance discounts for homeowners who reduce wildfire risk on their property.
Pérez announced her legislation at a news conference Wednesday held in Altadena by the Eaton Fire Survivors Network, a community group established after the Jan. 7 wildfires.
“One year in what we are living through is a K-shaped recovery,” said Joy Chen, executive director of the group, in opening remarks that echoed commentary on the nation’s economy.
“At the top of the K, recovery has begun for two groups, families who had wealth before the fire, and the lucky few like me, whose insurance actually paid what it owes. Everyone else has been stuck at the bottom of the K,” she said.
A recent survey has found 7 in 10 fire victims are still displaced.
Altadena resident Claire Thompson, who spoke at the event, has been living in a rented property since the Eaton fire, which caused severe smoke damage to the West Terrace Street home she shared with her husband.
An industrial hygiene firm found “serious and extensive” contamination by multiple toxins, including cyanide, lithium, lead, arsenic and beryllium, according to a report reviewed by The Times.
None of that has been cleaned up as Thompson has fought with her insurer, State Farm General, over the extent of the remediation — and she now worries she will run out of insurer rent payments while the claim drags on.
An initial estimate by the insurer pegged the damage at about $61,000 while a later estimate lowered that to about $42,000, reports show.
“Our original adjuster said our house needs to be take down to the studs,” said Thompson, 37, who now thinks it may cost $700,000 to make her home livable again — “so even the first estimate was wildly under.”
“We can’t speak to the specifics of any individual customer claim,” said State Farm spokesperson Sevag Sarkissian. “However, we can share that we are committed to continuing being a partner with our customers throughout their recovery.”
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