LA Insurance Lawsuits: Antitrust, State Farm, and Pending Bills

The January 2025 Palisades and Eaton fires have produced a wave of Los Angeles wildfire insurance lawsuits and enforcement actions on several fronts at once: an antitrust case accusing 25 insurers of conspiring to drop coverage before the fires, a state regulatory action seeking millions in penalties and a possible license suspension against State Farm, a separate Los Angeles County investigation, a case against the California FAIR Plan over smoke-damage denials, and private bad-faith suits against Farmers and Liberty Mutual. If you held a policy in the burn area or were pushed onto the FAIR Plan after early 2023, you are likely covered by at least one of these cases.

Antitrust Cases Accusing Insurers of a Coordinated Pullout

On April 18, 2025, two lawsuits were filed in Los Angeles County Superior Court alleging that major insurers did not independently retreat from fire-prone neighborhoods but coordinated a group boycott. The cases are Todd Ferrier et al. v. State Farm Group et al. (Case No. 25STCV12117) and Anthony Canzoneri v. State Farm Group et al., filed by Larson LLP and Shernoff Bidart Echeverria LLP. They name State Farm and 24 other insurers that together hold roughly 75 percent of the California home insurance market.¹²

The complaints allege that beginning around early 2023, the defendants agreed to simultaneously cancel policies and refuse new ones in Pacific Palisades, Malibu, Altadena, and other high-risk communities. The alleged purpose was to force homeowners onto the FAIR Plan, which caps coverage at $3 million and charges higher premiums, while a 2024 regulation lets insurers pass half of the FAIR Plan’s emergency assessments onto policyholders in unaffected areas.¹

Who the cases cover differs. Ferrier represents 60 homeowners who lost property in the January 2025 fires. Canzoneri is broader, seeking to represent all policyholders forced onto the FAIR Plan after the alleged conspiracy began in early 2023.³⁴ Both suits assert violations of California’s antitrust and unfair competition laws and seek compensatory damages, treble damages, and an injunction against the alleged group boycott.¹

The Justice Department Backed the Homeowners

On May 1, 2026, the U.S. Department of Justice Antitrust Division filed a statement of interest in Ferrier, siding with the homeowners against the insurers’ motion to dismiss. The insurers had invoked the Noerr-Pennington doctrine, which shields petitioning of government agencies from antitrust liability. The DOJ argued that a horizontal boycott — insurers coordinating to refuse coverage and agreeing not to pick up each other’s dropped policyholders — is economic conduct, not lobbying.³

The DOJ also addressed the McCarran-Ferguson Act, which usually exempts the “business of insurance” from federal antitrust claims but excludes “boycott, coercion, or intimidation.” The DOJ argued the alleged conspiracy falls inside that boycott exception.⁵ Deputy Assistant Attorney General Charlie Beller said the filing was meant to prevent the “improper use of certain legal doctrines to deprive Angelenos of their day in court.”³

California’s Enforcement Action Against State Farm

On May 4, 2026, Insurance Commissioner Ricardo Lara announced that the California Department of Insurance had filed an Accusation and Order to Show Cause against State Farm General over its handling of roughly 11,300 residential claims from the 2025 fires.⁶ The investigation began in June 2025 after widespread complaints from fire survivors.⁷

Examiners reviewed a random sample of 220 claims and identified 398 violations of state law, with 34 more from consumer complaints, for a total of 432.⁶ The alleged problems:

Missed statutory deadlines to begin investigating claims within 15 days, accept or deny within 40 days, or pay within 30 days, with one investigation reportedly left untouched for three months.⁷
Unreasonably low settlement offers, with internal records showing payments held for months even though staff acknowledged they should have been approved.⁷
A pattern of “adjuster roulette” in which policyholders were shuffled among as many as a dozen adjusters within four months.⁸
Denial or misclassification of hygienic testing costs for toxic smoke contaminants and misrepresentation of policy coverage for smoke remediation.⁶

Under California Insurance Code Section 790.035, fines can reach $5,000 per violation or $10,000 for willful violations, so the total could run roughly $2 million to $4.3 million. Regulators are also considering a one-year suspension of State Farm’s certificate of authority, which would bar the company from writing new policies in California.⁹⁸ A state administrative law judge will hold a hearing and recommend penalties to Commissioner Lara for a final decision; no hearing date has been set as of mid-2026.

State Farm rejected the allegations, calling the issues “primarily administrative and procedural errors” and the enforcement action “a reckless, politically motivated attack.”⁷

Los Angeles County’s Separate Investigation

LA County Counsel Dawyn Harrison opened a civil investigation into State Farm on November 13, 2025, under California’s Unfair Competition Law. It covers the same delays, underpayments, adjuster shuffling, misrepresentation of policy terms, and smoke-damage disputes as the state’s case, and it specifically requested internal documents on State Farm’s use of artificial intelligence in the claims process.¹⁰¹¹

State Farm said it was “cooperating fully” with the state Department of Insurance and called the county’s investigation a “distraction.”¹¹ Under the Unfair Competition Law, the county can seek restitution, civil penalties, and injunctive relief on behalf of the people of California.¹²

Action Against the FAIR Plan Over Smoke Damage

If your policy is through the California FAIR Plan, there is a separate enforcement track. On July 31, 2025, Commissioner Lara filed an Order to Show Cause alleging at least 418 violations of consumer protection laws in the plan’s handling of smoke-damage claims from the Palisades and Eaton fires.¹³

The underlying legal question has already turned against the FAIR Plan. In May 2024, the California Supreme Court ruled that “direct physical loss or damage” can include contamination by noxious substances such as smoke. On July 8, 2025, a court formally invalidated the FAIR Plan’s restrictive policy language because it provided less coverage than the mandatory standard fire policy.¹⁴ The department alleges the FAIR Plan continued to deny legitimate claims anyway, misrepresenting terms, failing to investigate fairly, and denying claims without a reasonable basis.¹³

Policyholders have also sued the plan directly. Two pending cases in Los Angeles County Superior Court — Ronald Barak et al. v. California FAIR Plan Association et al. (Case No. 25STCV10670) and Smith et al. v. California Fair Plan Association et al. (Case No. 25STCV12265) — challenge the plan’s claim denials.¹⁵

Private Suits Against Farmers and Liberty Mutual

Individual homeowners have brought their own bad-faith cases, two of which carry proposed class-action components other policyholders could join.

Farmers Insurance and the HygieneTech Testing

In February 2026, Altadena homeowners Anita Ghazarian and Simon Penny filed Ghazarian v. Fire Insurance Exchange in Los Angeles County Superior Court against Fire Insurance Exchange, a Farmers entity, and Hygiene Technologies International (HygieneTech), the firm Farmers hired to assess smoke contamination from the Eaton Fire. The suit alleges HygieneTech performed substandard inspections that understated contamination, and that Farmers relied on those reports to deny or limit remediation payments.¹⁶ The complaint includes a proposed class action against HygieneTech covering all California homeowners affected by similar testing practices.¹⁷

Liberty Mutual and Aerial Roof Photos

A proposed class action by Singleton Schreiber accuses Liberty Mutual of canceling homeowner policies based on aerial photographs the suit calls “demonstrably false.” Named plaintiff Maria Badin alleges Liberty Mutual used grainy roof images to manufacture grounds for non-renewal, pushing homeowners onto the FAIR Plan.¹⁸ The suit seeks damages and an order halting the practice.¹⁹

What Protects Your Coverage Right Now

Immediately after the fires, Commissioner Lara imposed a mandatory one-year moratorium on cancellations and non-renewals for residential properties in ZIP codes within or adjacent to the Palisades, Eaton, Hurst, Lidia, Sunset, Woodley, and other fire perimeters in Los Angeles and Ventura Counties. The protection applies whether or not your home was damaged, and runs one year from the Governor’s January 7, 2025, emergency declaration.²⁰

The Commissioner also pushed insurers to rescind pending non-renewals. State Farm agreed to renew all Los Angeles County residential policyholders facing cancellation, as long as the policy had not already lapsed before January 7, 2025.²¹ Governor Newsom also signed the “Eliminate the List” law, which requires insurers to pay 60 percent of personal property coverage limits (up to $350,000) for total losses without a detailed inventory for the first 100 days.²²

Bills That Could Change the Rules

Two Department of Insurance-sponsored bills are in the California legislature as of mid-2026 and would affect future disaster claims:

SB 876 (Padilla), the Disaster Recovery Reform Act, would double penalties for violations of fair claims practices during declared emergencies and mandate restitution for affected policyholders.⁶
AB 1795 (Gipson), the Smoke Damage Recovery Act, would direct the California Environmental Protection Agency to develop health-based standards for inspecting and remediating smoke-damaged homes by June 2027, create certification requirements for smoke-damage testing professionals, set a 30-day deadline for insurers to inspect and pay claims, and bar insurers from cutting off additional living expense benefits until a home is cleared for habitation.²³

Both were amended in spring 2026 and remain in committee.²⁴ They would not apply retroactively to the 2025 fire claims, so the enforcement actions and private suits above remain the main avenues for current policyholders seeking recovery.

1
Larson LLP. CA Wildfire Antitrust Lawsuit
2
CBS News. Insurers California Wildfires Collude Limit Coverage Lawsuits Allege
3
U.S. Department of Justice. Justice Department Files Statement of Interest in California Fire Insurance Case
4
PropertyInsuranceCoverageLaw.com. Canzoneri v. State Farm Class Action Complaint
5
U.S. Department of Justice. DOJ Statement of Interest in Ferrier v. State Farm
6
California Department of Insurance. CDI Enforcement Action Against State Farm
7
CNN. LA Fires 2025 State Farm Home Insurance
8
Los Angeles Times. State Farm Wildfires Fines Regulators License Mishandling Fire Claims
9
CalMatters. State Farm California Violations
10
Los Angeles County Counsel. County Counsel State Farm Wildfire Claims Letter
11
LAist. LA County State Farm Investigation Fire Insurance Claims
12
Los Angeles County Counsel. Los Angeles County Opens Investigation Into State Farm’s Handling of Wildfire Claims
13
California Department of Insurance. CDI Legal Action Against FAIR Plan
14
WSHB Law. Court Invalidates California FAIR Plan’s Smoke Damage Limitations
15
Crowell & Moring. California Cases to Watch in 2026
16
Singleton Schreiber. Altadena Homeowners Sue Farmers Insurance Testing Firm Over Eaton Fire Smoke Claims
17
Singleton Schreiber. Lawsuit Filed Against Farmers Insurance for Bad Faith Smoke Damage Practices
18
Singleton Schreiber. California Homeowner Sues Liberty Mutual Claims Insurance Dropped Over Demonstrably False Photo
19
Singleton Schreiber. Grainy Photos of Their Roofs Cost Them Their Insurance Now Homeowners Are Fighting Back
20
California Department of Insurance. Mandatory One Year Moratorium Non-Renewals
21
California Department of Insurance. Commissioner Lara’s Call to Action Leads
22
CalMatters. Insurance After Los Angeles Fires
23
CalMatters Digital Democracy. AB 1795 Gipson
24
California Department of Insurance. CDI Press Release on AB 1795