Los Angeles County Counsel has opened an investigation into how Farmers Insurance handled claims from survivors of the Eaton and Palisades fires, with affected policyholders complaining of claim delays, refusals to pay for lead and other contamination testing and remediation, underpayments, and denials of legitimate wildfire claims. The probe centers on California's Unfair Competition Law, the same statute the county used last month when it sued State Farm over its handling of thousands of wildfire claims.
According to county counsel, Eaton Fire survivors who held Farmers policies said the insurer was slow, resistant, or outright refused to pay for contamination testing conducted by qualified industrial hygienists, as reported by CBS News Los Angeles. Some Eaton Fire survivors ended up paying out of pocket for that testing themselves. Los Angeles County Supervisor Kathryn Barger said Eaton Fire survivors paid their premiums but that Farmers left them with contaminated homes and refused to pay for testing and cleanup.
Homes Left Standing But Contaminated
Testing of standing homes in the burn zones revealed contamination with lead, asbestos, chromium, and other toxic substances, per the county's account relayed through the same CBS report. Farmers declined to cover living expenses tied to clearing those contaminated substances from affected homes, leaving some families to shoulder both the testing costs and the uncertainty of returning to homes that hadn't been properly cleared. Board Chair Lindsey P. Horvath said families with damaged or contaminated homes should not have to choose between returning to unsafe homes and financial devastation.
Horvath added that policyholders deserve the benefits and support they paid for after paying millions of dollars in premiums over the years. Barger said the county will hold Farmers accountable if the insurer is found to have broken the law. Farmers did not immediately respond to CBS Los Angeles after being contacted for a statement, and the outlet noted no immediate response was received.
A Playbook Already Tested Against State Farm
The Farmers probe is not the county's first swing at a major carrier. Los Angeles County filed a lawsuit against State Farm the previous month, alleging the insurer mishandled wildfire survivors' claims. That 107-page complaint, filed August 31 in Superior Court, accused State Farm General Insurance Company of mishandling roughly 11,300 claims stemming from the Eaton and Palisades fires under the state's Unfair Competition and False Advertising laws, according to Los Angeles County.
State Farm policyholders separately claimed their claims received delayed responses and were ultimately underpaid. In response to the county's lawsuit, State Farm said it strongly disagreed with the county's characterization of the events. Property Insurance Coverage Law reports that County Counsel Dawyn Harrison has partnered with the advocacy group Consumer Watchdog and veteran consumer protection attorney Christina Tusan, a former FTC and California Attorney General prosecutor, to lead the county's enforcement push against insurers.
Why the County Is Using an Unfair Competition Statute
Rather than leaving individual policyholders to fight breach-of-contract cases alone, county lawyers are leaning on California's Unfair Competition Law, codified at Business and Professions Code Section 17200, which lets public prosecutors seek civil penalties of up to $2,500 per violation along with injunctions and restitution, according to a summary from FindLaw. That approach treats systemic claims-handling failures as unlawful business practices rather than routine contract disputes.
State regulators have already flagged similar problems independently. The California Department of Insurance issued an Accusation and Order to Show Cause in May seeking to suspend State Farm's operating certificate after a Market Conduct Examination of 220 randomly selected 2025 wildfire claims turned up 398 regulatory violations across 26 categories, according to Consumer Watchdog.
Private Litigation Already Underway in Altadena
Farmers is also facing a separate legal challenge from Altadena property owners themselves. In February 2026, those homeowners filed a proposed class-action lawsuit in Los Angeles Superior Court accusing Farmers and its approved vendor, Hygiene Technologies International, of using substandard environmental assessments to systematically deny smoke and toxic soot remediation claims after the Eaton Fire, according to Singleton Schreiber. That lawsuit points to the same central tension driving the county's probe: policyholders and their attorneys argue insurers rely on biased hygiene vendors who conduct superficial inspections to avoid paying for expensive toxic cleanup.
The scale of the underlying disaster helps explain why these claims fights matter so much. The Eaton and Palisades fires both ignited on January 7, 2025, during a record-setting Santa Ana wind event, together burning more than 37,000 acres, killing 31 residents, and destroying more than 16,200 structures across Los Angeles County, according to background compiled from wildfire records. A Department of Angels survey previously covered by Hoodline found that roughly 70% of insured Eaton and Palisades survivors encountered claim delays or denials, and nearly 40% had exhausted or were nearing exhaustion of their temporary housing benefits.
A Market Already Under Strain
Farmers is among the major private insurers in California. As private coverage options have contracted, the state's insurer of last resort, the California FAIR Plan, requested a 35.8% rate increase in late 2025. State law also imposed a mandatory one-year moratorium on residential insurance non-renewals and cancellations in affected Los Angeles County ZIP codes, under California Insurance Code Section 675.1, according to the California Department of Insurance.
The insurance disputes are unfolding alongside separate efforts to address contracting in the burn zones. Together, the insurance investigations and efforts to address contracting illustrate the compounding obstacles facing families still trying to rebuild more than a year and a half after the fires tore through their neighborhoods.
