Six couples and one individual harmed by the devastating fires in Los Angeles County have filed a lawsuit against State Farm, alleging that the insurance company misled them regarding their coverage.
The suit claims that the homeowners were deliberately and grossly underinsured, leaving them unable to rebuild after losing their homes to the flames.
Filed in Los Angeles County Superior Court, the complaint names State Farm General, a California home insurer operating under the larger State Farm Group based in Bloomington, Illinois.
The plaintiffs allege that State Farm exploited homeowners’ lack of knowledge about rebuilding costs, setting projected replacement costs far lower than actual expenses.
This practice reportedly left many fire victims without adequate financial resources to replace or rebuild their homes.
According to the lawsuit, State Farm has engaged in what is termed a “multi-faceted illegal scheme,” which is designed to create large, illicit profits by deceptively misleading more than a million homeowners in California.
The complaint includes multiple claims, such as negligence and breach of contract, and seeks both compensatory and punitive damages while calling for reforms to the company’s policies.
State Farm representatives have not yet responded to requests for comments regarding the lawsuit.
This is not the first time fire victims in L.A. County have taken legal action against their insurers for underinsurance.
Earlier lawsuits were filed against USAA and two insurers affiliated with AAA by policyholders who similarly felt they did not have enough coverage to rebuild their homes.
Among the households involved in the latest lawsuit, four are from Altadena, two hail from Pacific Palisades, and one is from Sierra Madre.
Collectively, the homeowners had policies with State Farm, and some of them were reportedly underinsured by amounts exceeding $2 million after their homes were consumed by the Palisades and Eaton fires.
In one notable instance cited in the lawsuit, a couple had contacted their State Farm agent prior to the January fires, seeking confirmation that their dwelling limit just over $1 million would adequately cover the cost to rebuild their Altadena home.
The agent assured them that the amount would be sufficient.
However, after their home was destroyed, they received estimated rebuilding costs exceeding $3 million, which starkly contrasts with what the agent had promised.
The timing of this lawsuit aligns with a recent announcement made by California’s Insurance Commissioner, Ricardo Lara, who noted that a formal inquiry would be launched into how State Farm General is handling a vast number of claims submitted by fire victims after receiving numerous complaints.
As of mid-June, State Farm reported having received over 12,800 claims related to the fires and having paid more than $4.03 billion to its customers in California.
Additionally, State Farm has found itself implicated in a separate lawsuit filed in April, where homeowners accused numerous insurers of colluding in a manner that forced them into the California FAIR Plan.
This plan, which acts as the insurer of last resort, offers limited yet typically expensive coverage.
Homeowners claim that insurers have refrained from issuing new policies in those areas prone to fires, benefiting from higher premiums while minimizing their liabilities through the FAIR Plan during catastrophic events.
The latest lawsuit against State Farm highlights that the insurer’s alleged collaboration with other companies to channel homeowners to the FAIR Plan led to policies that carried significantly lower coverage limits.
Such limits posed less exposure risk for State Farm.
The complaint argues that the average homeowner would have little reason to question the building cost estimates provided by State Farm, given the company’s significant yearly policy issuance.
According to the lawsuit, the affected policyholders, along with many others, now find themselves unable to rebuild their homes without recourse from the legal system.
image source from：https://www.latimes.com/business/story/2025-06-16/l-a-county-fire-victims-sue-state-farm-for-negligence-claim-they-were-grossly-underinsured
