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Regulators say the penalty is the highest ever sought, but a cap on each violation would soften the blow for California’s largest insurer.
By Rukmini Callimachi and Blacki Migliozzi
Rukmini Callimachi and Blacki Migliozzi spent months covering the aftermath of the Los Angeles fires, collecting thousands of pages of toxicology reports from homes damaged by smoke.
May 4, 2026, 7:08 p.m. ET
California’s insurance regulator announced on Monday that it was seeking a record fine against State Farm, the state’s largest insurer, after an investigation revealed that the company systematically mishandled claims from the Los Angeles wildfires last year.
The monthslong investigation, known as a market conduct exam, followed thousands of complaints against State Farm in which policyholders alleged a pattern of delays and claim denials that crippled their ability to rebuild.
The California Department of Insurance looked at a sample of 220 State Farm claims and found a total of 398 violations of state law in 114 of them. Many of the claims had multiple violations.
According to state law, the department can fine State Farm $5,000 per violation — or $10,000 if the violation was willful — which would mean a penalty of approximately $2 million, said Michael Soller, a deputy insurance commissioner in California, who explained that the higher $10,000 penalty is rarely applied because proving willfulness is difficult.
“There’s no record of the department ever seeking a larger fine against an insurance company for mishandling claims,” Mr. Soller, a spokesman for the regulator, said.
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