Homeowners Sue CA Insurance Companies, Alleging 'Collusion' After LA Wildfires (2025)

​The plaintiffs say these companies conspired to cancel existing policies and stopped issuing new ones in high-risk wildfire areas.

Posted Mon, Apr 21, 2025 at 4:13 pm PT

On Friday, law firms Larson LLP and Shernoff Bidart Echeverria LLP filed two lawsuits in Los Angeles County Superior Court. The suits accuse prominent insurers — including State Farm, Farmers, Travelers, Zurich, and Liberty Mutual — of violating California's antitrust and unfair competition laws.

The plaintiffs say that these companies conspired to cancel existing homeowner policies and even stopped issuing new ones in high-risk wildfire areas such as Pacific Palisades, Malibu and Altadena, where fires leveled entire neighborhoods in January.

This alleged collusion effectively funneled homeowners into the California FAIR Plan, the state's insurer of last resort.

“Insurance is a product that homeowners hope never to need, but rely on for peace of mind in normal times and for critical help rebuilding after a catastrophe,” said Michael J. Bidart of Shernoff Bidart Echeverria LLP. “The complaints allege that, by colluding to push plaintiffs and so many like them to the FAIR Plan, the defendants have reaped the benefits of high premiums while depriving homeowners of coverage that they were ready, willing, and able to purchase to ensure that they could recover after a disaster like January’s wildfires.”

The California Fair Access to Insurance Requirements Plan offers limited coverage with a maximum payout of $3 million and premiums that are often more than double those of traditional policies. The lawsuits argue that by steering homeowners toward the FAIR Plan, insurers were able to maintain profitability.

The lawsuits are seeking compensatory and treble damages, as well as an injunction to prevent further anticompetitive behavior by the insurers. One of the suits aims for class-action status on behalf of all California FAIR Plan policyholders, while the other focuses on families who suffered significant losses during the January wildfires.

“California’s antitrust and unfair competition laws exist to address the very kind of conspiracy and collusion that the complaints allege the defendants engaged in, depriving homeowners of the competitive and adequate insurance products necessary to fully protect them from the losses sustained during this year’s fires,” said Stephen G. Larson of Larson LLP. “We look forward to litigating these claims so plaintiffs can rebuild what was lost and also to end the group boycotts that we believe have tainted and upended the market for insurance in Los Angeles County.”

The lawsuits come amid rising tensions between California homeowners and insurance providers, as the threat of future wildfires looms and Los Angeles County continues to rebuild from the devastating Eaton and Palisades fires.

As State Farm pursues a 17% rate increase for home insurance, survivors of the Eaton Fire Thursday urged state Insurance Commissioner Ricardo Lara to launch a formal investigation into what they describe as widespread delays, denials and unresolved claims by the nation's largest insurer following January's wildfires.

Nine survivors of the Eaton Fire and longtime State Farm policyholders held a news conference outside the insurer's Pasadena tent Thursday to deliver a collective message: "State Farm is failing California families and must be held accountable."

The group is part of the Eaton Fire Survivors Network (EFSN), a 1,700- member coalition advocating for recovery after the devastating fire burned more than 14,000 acres, killed at least 17 residents and destroyed hundreds of structures in the Altadena area.

"Most people assume that if you pay your premiums, your insurer will be there when disaster strikes," Joy Chen, a leader of the EFSN, said during the news conference. "But for many State Farm policyholders, the fire was just the start of their trauma. Each day since then, their financial and emotional devastation has grown because of State Farm's actions."

READ MORE: Fire Survivors Call for Investigation into State Farm Over Claims

City News Service contributed to this report.