A group of property owners affected by the January wildfires are suing a major California insurance company, including the state’s largest state farm, which allegedly violated California’s antitrust and unfair competition laws. The lawsuit follows insurance commissioner Ricardo Lara and others in regards to the aftermath of the Eton and Palisade fire, opposed to California’s fairplan (particularly related to smoke damage).
The group’s complaints and demand for the ju trial filed April 19 in Los Angeles Superior Court alleges that in a “unfair conspiracy” that major insurers conspired to “eliminate the competition between them,” thereby forcing homeowners to “deliberately and systematically” accept California’s fair plans.
On the same day, the lawyer filed another class action lawsuit alleging the same thing.
“Insurance is a product that we hope homeowners never want to need, but in normal times we rely on for peace of mind and critical support after a catastrophe,” said Michael J. Bidart of Shernov Bidart Echeria LLP, one of the law firms representing the plaintiffs, in a statement. “The complaint argues that by conspiring to support a fair plan, the defendant enjoyed the benefits of high premiums while robbing the report that he was prepared and willing to recover after a disaster like the wildfire in January.”
Jamie Court, president and chairman of the Consumer Watchdog Committee, a Santa Monica-based progressive nonprofit, said representatives from major insurance companies will meet regularly to “discuss the issues they consider to be market issues.” “This clearly is about as a whole industry to encourage people in high-risk sectors to cut their benefits policies while continuing to attract higher premiums from everyone else.”
After the 1965 Watts riots began to set up the Fair Plan after the escaped insurance company highlighted the need for a new type of airline. The goal was to provide insurance options to California homeowners who live where open market carriers refused to cover, including communities vulnerable to wildfires.
The fair plan has its own reserves, but it bounces back to licensed California property insurance companies. The plan has proven crucial due to the tragic fires in the state, including after the 2018 camp fire that destroyed the town of paradise and cost insurance companies $12.5 billion.
However, fair plans are overwhelming as many insurance companies cancel coverage for homeowners in the fire risk zone. The number of Fair Plan policyholders has skyrocketed from around 200,000 home policyholders in 2020 to nearly 560,000 as of March 2025. The plan estimates that it will lose roughly $4 billion in claims related to the January fire in LA, and emit reserves and reinsurance.
In response, Lara signed a policy last year that allows a fair plan to value $1 billion against residential claims. These private insurers can temporarily add additional charges to premiums paid by their policyholders in order to recover 50% of that, or $500,000.
These increases in premiums apply to homeowners everywhere in California, not just fire-prone areas. That said, Lara must individually approve these additional fees.
Opponents of the policy call it an industry “relief” that pays consumers.
Carmen Balber, executive director of Consumer WatchDog, told The Times in January:
The new lawsuit alleges that the state’s top insurance companies (insurers required to support them fairly in the law) have colluded to cancel plans, ending with a low-range limit of $3 million, although homeowners have higher premiums than most plans in the commercial market. The plaintiffs each seek three times the damage sustained.
“This is exactly the type of action that needs to happen to break up what we clearly act like a cartel,” the court said.
At the time of publication, representatives from the state farm and Allstate did not respond to requests for comment.
Fairplan spokesman Hilary McLean told The Times.
“The Department of Insurance is not involved in this matter as a party and cannot comment on the lawsuit. Our focus is to protect California consumers,” Gabriel Sanchez, representing Ricardo Lara’s office, said in an email.
Earlier this month, State Farm proposed a 17% emergency rate hike to state officials from its initial 22% demand in February, saying it should “help to stabilize the general financial position of state farms,” noting that it would “have further constraints” its ability to provide home insurance in California.
Meanwhile, many people who lost their homes in the LA fire are seeking for a formal government investigation of major insurance providers, claiming that delays and denials keep them in the dire financial channels and housing range.
Times staff writer Lawrence Dalmient contributed to this report.
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