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The night the Eaton fire destroyed block after block of Altadena, Jared Franz was huddled in a hotel room with his wife, two kids and their dog, praying the family’s home would escape the ferocious wind-swept blaze.
The family turned out to be one of the lucky ones, with their house on Luna Court still standing the next day, though it suffered smoke damage that made it uninhabitable.
After escaping what could have been a total disaster, Franz said he didn’t anticipate what came next — a frustrating claims process with his insurer, State Farm General.
Franz said he has been assigned half a dozen different adjusters and is still at odds over the amount of remediation his home needs and had to repeatedly demand payments for long-term shelter as his house is fixed.
“I was on the phone for hours and hours and no responses, no phone calls back, and no emails or anything,” he told The Times. “After paying insurance for the last 10 years, and then when you need it, they’re being so stingy with everything.”
‘They’re being so stingy with everything’
Such complaints aren’t isolated. State Farm General, California’s largest home insurer, has been under intense scrutiny since 2023, when it started retreating from the state’s property market that has been battered by a series of disastrous wildfires. The insurer dropped 72,000 policyholders last year — including many in the Palisades and Eaton fire zones — which made policyholders more vulnerable when the blazes came.
The devastation caused by the twin blazes has raised fresh questions about whether the state — and its top insurance regulator, Ricardo Lara — have done enough to protect homeowners.
To be sure, the costs to State Farm are enormous. The company and its parent, State Farm Mutual Automobile Insurance Co. in Bloomington, Ill., said they have shelled out nearly $2.2 billion to cover 11,750 fire and auto claims from the wildfires as of Feb. 26.
State Farm General, which does not provide auto insurance, estimates its total fire claims will hit $7.9 billion, far more than any other property insurer has disclosed, though it said reinsurance payments will pare its net costs to a little over $600 million.
The steep losses have prompted the California subsidiary to seek a 22% emergency rate hike for its homeowners policies even as its claims-handling practices are being scrutinized. State Insurance Commissioner Ricardo Lara initially turned down the request but is considering additional financial information submitted by the insurer.
Amy Bach, co-founder and executive director of United Policyholders, a San Francisco-based consumer group, said the State Farm companies have a reputation of being difficult with smoke damage claims, which are less cut-and-dried than total losses.
State Farm, California’s largest home insurer, said Thursday it will offer renewals to all of its 250,000 L.A. County residential policyholders slated to have been dropped, not just those in fire ravaged neighborhoods
“State Farm is taking a very rigid, we don’t negotiate, we don’t discuss, we’re not paying for this, that’s the end of the story, talk-to-the-hand approach,” she said. “There’s this huge financial liability at stake.”
Sevag Sarkissian, a spokesperson for State Farm Insurance Cos., the nation’s largest property and casualty insurer, disputes the claim. He said the insurer would not discuss individual policyholder complaints against its California subsidiary due to its privacy policy, but added that it takes “pride in our customer service” and is “committed to paying what we owe, promptly, courteously and efficiently.”
State Farm said in January it was expanding an offer to renew residential policies it had intended to drop last year to all Los Angeles County customers.
Michael Soller, a spokesperson for Lara, said the department is investigating the smoke damage issue. Lara issued a bulletin last week reminding insurers they must “make good faith efforts to effectuate prompt, fair, and equitable settlements of smoke damage claims.”
“Wildfire survivors deserve fair treatment from their insurance companies,” Soller said. “Smoke damage is real, and insurance companies must investigate claims properly, not deny them outright or pressure homeowners into accepting less than they are owed.”
California’s Fair Plan, the state’s insurer of last resort, may be unable to pay billions in claims arising from the Los Angeles fires and may require a bailout that could ultimately be paid by homeowners statewide.
State Farm General has long been California’s largest home insurer, with a market share of about 20% in 2023.
That figure has fluctuated over the decades but has grown since 2018 when it was under 18%, according to Fitch Ratings. That was the year the disastrous Camp fire nearly leveled the Northern California town of Paradise.
That fire caused some $12.5 billion in insured damages, at the time the costliest in U.S. history, prompting some insurers to decline to renew customers or take on new ones.
Rapid growth in California
But as other insurers pulled back, State Farm General under former Chief Executive Thomas Conley saw an opportunity to expand its market share.
Its annual premiums from its California homeowners and other policies grew by about two-thirds between 2019 and 2023 to $3.69 billion, according to ratings agency AM Best.
“There was a lot going on in the marketplace with some carriers pulling out. State Farm had such a huge market share and a lot of people didn’t have any place else to go so they went to State Farm,” said Ken Nigohosian, vice president of government affairs for the Western Insurance Agents Assn., a trade group.
Sarkissian said the company “tried to responsibly limit overexposure in high-risk areas, while allowing for targeted growth in lower-risk areas of the state.”
State Farm General changed course in May 2023, announcing it would no longer write new homeowners and other policies in the state, citing its “growing catastrophe exposure” and other challenges, including rapidly rising construction costs. A year later, it said it would not renew thousands of property insurance policies, including 30,000 covering homeowners, rental dwellings and others.
When the Jan. 7 fires laid waste to Pacific Palisades and Altadena, however, the company still had huge liabilities on its books in both communities.
For a decade, Franz, 47, and his wife have lived in La Vina, an upscale gated subdivision in northwest Altadena below the San Gabriel Mountains.
More than 50 of 271 homes in the community were lost in the fire. While Luna Court was spared, the street directly above it was ravaged, with soot and ash billowing onto Franz’s home and seeping into his house.
Nearly two months later, the acrid smell of smoke still hangs in the air as no remediation work has yet begun on the home, which was invaded by a 2-foot-long rat — apparently seeking to escape the flames — that ate food in the pantry before it was trapped by an exterminator.
Haden Kirkpatrick, a top State Farm executive, said he was fired after being recorded in an undercover video making disparaging remarks about Pacific Palisades homeowners.
Franz said his experience with State Farm General turned sour as he was repeatedly assigned new adjusters who pleaded ignorance of what prior ones had promised, slowing the process of getting his 3,800-square-foot house livable again.
He said he was denied environmental testing to determine if there were any toxic substances that penetrated his interior, and finally paid more than $2,000 for his own testing, which found soot and ash throughout the house but not asbestos. He said State Farm now plans to do its own testing.
It took him more than a month, he said, to get an estimate from Servpro, a State Farm contractor that restores smoke-damaged houses, a process that can be as simple as wiping down exposed surfaces or as extensive as removing drywall.
Distrustful of the $42,000 estimate, which involved cleaning and the replacement of attic insulation, he contacted another vendor. That one estimated it would take $300,000 to restore the $2.3-million home, including replacing the flooring.
“We want to do it right,” he said. “We don’t want to risk the kids’ health and safety and our health and safety.”
Before the devastating fires burned across Los Angeles, many homeowners learned they were losing their insurance policies. Some faced big increases in premiums that they couldn’t afford.
Franz said State Farm refused to pay beyond April 22 for his family’s shelter, which is now a cramped hotel room. After The Times inquired about his case, the insurer agreed last week to pay a six-month lease while the house is remediated.
“The process with State Farm can only be regarded as a combination of negligence, incompetence, and stonewalling designed to ensure policyholders are forced to return to homes that are unhealthy unless they have the financial resources to fight back,” he wrote in a Feb. 19 email to the company.
Franz, an economist for a large Los Angeles asset manager, has filed a complaint with the Department of Insurance and hired an independent public adjuster on a contingency basis to deal with State Farm General and get what he believes he is owed.
Fighting over insulation
Samantha Bonar, 55, felt she experienced a “Gone With the Wind” moment the night of the Eaton fire. Outside her window, she saw a bright orange fireball several blocks away and started throwing valuables into her car, similar to how Rhett Butler and Scarlett O’Hara fled Atlanta as it burned down.
When she returned to her Garfias Drive home of 24 years at the fire’s eastern edge in Pasadena, it was still standing but soot and ash covered her outside patio and her home smelled like a campfire.
She has been able to find housing at the empty home of a friend’s father who passed away, but it lacked a mattress, kitchen appliances and other necessities for which, she said, the insurer refused reimbursement.
State Farm General gave her an initial $1,500 check to get her back on her feet, she said, but balked at providing much in the way of living expenses, she said.
“They are fighting me over every throw pillow and piece of pizza,” said Bonar, a communications manager at City of Hope cancer hospital in Duarte.
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Like Franz, Bonar said she was denied environmental testing and had to fight with State Farm over the replacement of insulation that was removed from her attic and crawl space by Servpro.
She got a $10,000 bid from an insulation contractor that provided services to other State Farm General fire victims, but she said the insurer only allocated $1,500 for the work, refused to pay for replacement insulation in the crawl space and offered her just $132 for three shingles to fix her roof.
After The Times inquired about her case, she said State Farm offered last week to pay her more than $17,000 to replace all of her removed insulation and repair her roof.
However, the company still won’t pay to replace her mattress and her upholstered furniture, she said. She too filed a complaint with the Department of Insurance.
State Farm General had said it would reach out to the two policyholders, but otherwise declined to discuss the complaints.
The insurance department has received some 200 complaints about insurers regarding wildfire claims, most involving adjuster delays early on in the process, many of which have been resolved, said Soller. The department investigates complaints before releasing breakdowns by company, he said.
Denise Sze, a licensed public adjuster, traces some of the issues to the size of the catastrophe, which she said has forced State Farm to handle smoke claims remotely and bring in out-of-state adjusters unfamiliar with the high costs of the California market.
“The problem in catastrophes is they are rotating adjusters. They pick up any warm body that they can,” said Sze, who is representing State Farm General policyholders with Jan. 7 damage claims and serves as president of the Pacific Coast Assn. of Public Insurance Adjusters trade group.
Sarkissian said the insurer’s claims operation “includes a dedicated, mobile workforce, specially trained to handle catastrophe claims and prepared to go anywhere in the country within hours of being notified” and that “complex claims (large losses) may require more than one claim handler to best support our customer through the claims process.”
Sze said the State Farm companies have a tendency to push back on small expenses, while generally refusing to do any environmental testing on smoke-damaged structures. She said a positive test that turns up asbestos, lead or other heavy metals can escalate the costs of remediation.
“I think they’re trying to avoid the legal liability if they actually do the testing,” said Sze, also an attorney.
Lara’s bulletin last week said insurers must pay for professional testing if it is warranted and encouraged insurers to distribute low-cost commercially available home kits as a first step.
Bach, whose group focuses on assisting policyholders in their dealings with insurers, said there was general agreement that it was difficult to deal with State Farm General on smoke damage claims, though such problems are pervasive.
“Is it that they have the big market share, or is it that they take such a hard line?” Bach said. “I have to say that it is definitely both.”
Complaints over how smoke damage claims are being handled will be one of the subjects of a virtual meeting Los Angeles County Supervisor Kathryn Barger will hold Monday for residents.
The supervisor, whose district includes Altadena and who has been holding meetings related to the fires, has fielded complaints both from renters and homeowners who think insurers are not taking their smoke claims seriously.
“We heard that has been an issue,” said Barger spokesperson Helen Chavez Garcia. “Residents feel their [places] are not habitable.”
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