Los Angeles County announced Monday that it had filed a lawsuit against State Farm General after hundreds of victims of last year’s devastating wildfires complained that their claims had been delayed, denied or underpaid.
The lawsuit alleges that State Farm engaged in illegal and deceptive business practices that kept victims of the Palisades and Eaton fires from receiving what they were entitled to under their policies.
County officials said their investigation into the complaints found unreasonable delays in processing claims, as well as “systematic underpayments.”
Officials said they also found that State Farm had illegally suppressed smoke damage claims.
“Survivors are just asking for what’s right,” L.A. County Supervisor Kathryn Barger, who represents Altadena, said at a Monday news conference.
Bob Devereux, a State Farm spokesman, said in a statement that the company would respond to the lawsuit through the legal process.
“State Farm General strongly disagrees with Los Angeles County’s characterization of our wildfire claims response,” he said.
Devereux said that State Farm has so far paid more than $6.2 billion on claims related to the two wildfires, including about $1 billion for smoke-related damage. About 78% of the claims have been closed, he said.
“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,” he said.
“Our focus remains on helping customers recover,” he said.
Wildfire victims praised county officials for the lawsuit, which was filed in L.A. County Superior Court.
Joy Chen, executive director of Every Fire Survivor’s Network, said at the news conference that, in the months after the fires, it became apparent in talking to victims that those with State Farm policies were not getting the benefits they had paid for.
She said for those families, insurance had become “a barrier to recovery” rather than a safety net.
“Nineteen months after the fires, families are still suffering,” she said.
The county’s investigation included looking at complaints that Chen’s group and others had collected, as well as hundreds of other documents from State Farm policyholders.
County officials said that State Farm “failed to substantially comply” with their requests for documents and information during their investigation.
With more than 2.8 million residential and commercial policies, State Farm is California’s largest private insurer.
The county’s lawsuit includes dozens of complaints of L.A. County fire victims.
“After six decades of paying thousands a year for insurance, we expect them to honor their agreement,” said one family.
Many families say the insurer refused to test their homes for toxins left by smoke.
The lawsuit claims that State Farm “drastically lowballed” estimates of financial losses for destroyed or partially damaged homes.
“They offered us $11,000 to remediate our five-bedroom house,” complained one family. ”That’s only 13% of the actual cost.”
According to the California Department of Insurance, 11,300 State Farm policyholders filed homeowner claims arising from last year’s L.A. County fires.
The lawsuit asks the court to require State Farm to pay full restitution to policyholders, as well as civil penalties for violating state law.
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