A burned home destroyed by the Eaton Fire that started on Jan. 7 in Altadena.
Los Angeles, California – A group of homeowners affected by the devastating January wildfires in Los Angeles County has filed lawsuits against some of California’s largest insurance companies, including State Farm, accusing them of violating the state’s antitrust and unfair competition laws by colluding to push customers into limited-coverage policies.
The lawsuits, filed Saturday in Los Angeles Superior Court, claim that major insurers conspired to reduce competition and drive homeowners into the California FAIR Plan — the state’s insurer of last resort — which offers less coverage at higher premiums. A separate class action lawsuit was also filed the same day, echoing these allegations.
In a statement, attorney Michael J. Bidart of Shernoff Bidart Echeverria LLP said insurers “reaped the benefits of high premiums while depriving homeowners of coverage” they were willing and able to pay for. The lawsuits name State Farm and other top carriers required to support the FAIR Plan.
Consumer advocates argue that the industry worked together to offload high-risk properties onto the FAIR Plan while continuing to charge rising premiums elsewhere. “This was clearly a concerted attempt by the entire industry,” said Jamie Court, president of Consumer Watchdog, a Santa Monica-based nonprofit. “They’ve created a system that fails the very people insurance is supposed to protect.”
The FAIR Plan, created in 1968, was designed to provide coverage to Californians in high-risk areas turned away by private insurers. But with wildfires increasing in frequency and cost, it has become overloaded. The number of FAIR Plan residential policyholders has nearly tripled since 2020, reaching nearly 560,000 by March 2025.
January’s fires are projected to cost the FAIR Plan about $4 billion — far exceeding its reserves and reinsurance. To cover losses, Insurance Commissioner Ricardo Lara authorized a $1 billion assessment on insurers backing FAIR. Those insurers can recoup half of that through temporary surcharges on policyholders statewide — a move critics call an “industry bailout.”
“Homeowners across the state should not be on the hook for the L.A. fires,” said Carmen Balber, executive director of Consumer Watchdog. “Insurance companies abandoned those neighborhoods.”
The plaintiffs are seeking triple damages, arguing they were knowingly left underinsured. FAIR policies are capped at $3 million in coverage and often carry higher premiums than commercial alternatives.
As of publication, representatives from State Farm and Allstate had not responded to requests for comment. The FAIR Plan, though not named in the lawsuits, declined to comment on pending litigation.
Many wildfire victims are now calling for a formal investigation into the insurance industry, alleging delays, denials, and displacement in the wake of catastrophe.
