Los Angeles County is suing State Farm, alleging the insurer systematically delayed payments, underpaid claims and denied benefits to thousands of policyholders affected by the January 2025 Eaton and Palisades fires.

The 100-page complaint, filed Monday, Aug. 31, in Los Angeles Superior Court, seeks restitution for policyholders, injunctive relief and civil penalties of up to $2,500 per violation, according to the county. The lawsuit does not specify a total dollar amount.

The Palisades Fire burn zone borders Bel Air, and State Farm is California's largest private insurer, with more than 2.8 million residential and commercial policies statewide. Canyon-area policyholders in Bel Air and Holmby Hills face the same insurer practices alleged in the suit.

"It's going to be a lot of money," Assistant County Counsel Scott Kuhn told reporters, as reported by Claims Journal.

The Palisades Fire killed 12 people and destroyed more than 6,800 structures across Pacific Palisades, Topanga and Malibu. The Eaton Fire killed at least 19 in Altadena and destroyed more than 9,000 buildings. Together, the fires caused roughly $40 billion in insured losses.

County Supervisors Kathryn Barger and Lindsey Horvath announced the suit at a press conference outside the Kenneth Hahn Hall of Administration. The county's investigation, launched Nov. 13, 2025, reviewed more than 500 complaints from State Farm policyholders and documents from community groups including Every Fire Survivors Network, Department of Angels and Eaton Fire Residents United.

The lawsuit alleges State Farm violated California's Unfair Competition Law and False Advertising Law through unreasonable processing delays, systematic underpayments, improper reassignment of adjusters, refusal to cover Additional Living Expenses (ALE) and illegal suppression of smoke damage claims. It also alleges the company created a public nuisance by leaving survivors unable to rebuild.

According to the California Department of Insurance (CDI), 11,300 State Farm policyholders filed homeowner claims from the fires.

Joy Chen, executive director of Every Fire Survivors Network, said her organization collected roughly 1,600 firsthand accounts alleging misconduct by State Farm. Chen told reporters that two-thirds of fire survivors remain displaced 19 months after the January 2025 fires. More than half are running out of housing funds within six months, she said, according to the Daily News.

The Los Angeles Times reported the lawsuit claims State Farm "drastically lowballed" loss estimates. One family cited in the complaint said the insurer offered $11,000 to remediate a five-bedroom house, calling it 13% of the actual cost.

State Farm spokesman Bob Devereux pushed back. In a statement reported by the Los Angeles Times on Aug. 31, Devereux said the company "strongly disagrees" with the county's characterization and has paid more than $6.2 billion on wildfire claims, including roughly $1 billion for smoke damage. About 78% of claims have been closed, according to the company.

The county suit is separate from a CDI Market Conduct Examination completed May 4, which found 398 violations across 220 randomly selected claims. The state Department of Insurance also filed its own lawsuit against State Farm in May, which could lead to the company temporarily losing its California license. Neither state action seeks restitution for individual policyholders. The county's does.

County Counsel Dawyn R. Harrison said the Affirmative Litigation and Consumer Protection Division will prosecute the case alongside Consumer Watchdog and consumer protection attorney Christina Tusan. Kuhn said the county is also investigating other insurers but hopes the State Farm suit sends a message to the industry.

No court hearing date has been announced. Residents with wildfire insurance complaints can file a request for assistance with the California Department of Insurance at 1-800-927-4357 or through the CDI website.