State Farm has not been a good neighbor. 

The insurance giant is in hot water with the Trump administration, and now the State of California, for its poor performance in compensating victims of the Eaton and Palisades Fires. 

Residents paid their premiums dutifully for years. But when disaster struck, they were on their own. 

State Farm notoriously dropped thousands of households from their policies, forcing them onto the California FAIR plan (which some took to calling the “un-FAIR plan”).

But those lucky enough to have insurance as of January 7, 2025 — the date of the fires — had to struggle to get State Farm to pay.

The Bloomington, Illinois, insurer made lowball offers to some policyholders, amounting to a small fraction of their losses, perhaps hoping they were desperate enough to accept.

The company also shuffled and reshuffled adjusters, so that months after working with one State Farm representative, a policyholder often had to start all over again with the next.

Perhaps most painful of all, State Farm required people who had lost their homes to make itemized lists of their possessions before they could obtain full compensation. For many who lost everything, compiling these lists was an almost impossible task, and a bitter one.

State Senator Ben Allen had to intervene, and managed to push SB 495 through the California legislature, requiring State Farm and other insurers to pay at least 60% of personal property losses before requiring a list. 

The Trump administration leaned on State Farm as well, and it increased its payout to 65%.

But State Farm continued to demand “The List” for the rest.

At a U.S. Senate hearing last May, Republican Josh Hawley pressed State Farm and other insurance companies about allegations that corporate HQ was overruling adjusters in the field, forcing them to lower their estimates of damage. 

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And earlier this year, the Trump administration weighed in again. EPA Administrator Lee Zeldin — Trump’s new “point man” on the rebuilding effort — met with residents and took insurance companies to task, promising to name names.

That seems to have spurred outgoing California Insurance Commissioner Ricardo Lara into action — belatedly.

Lara’s department launched an investigation, and concluded that State Farm had abused its customers. Lara wants to suspend State Farm’s license for a year and slap it with hefty fines.

Better late than never. Lara and Gavin Newsom’s administration had neglected the crisis in California’s insurance market for years, as insurance companies began fleeing the state.

Lara in particular was notoriously absent during key hearings at the state legislature.

The courts will decide what happens to State Farm. But whatever its fate, it missed an opportunity to live up to its “good neighbor” promise — in a year when it had record profits.

California is about to elect Lara’s successor. There are many qualified candidates for Insurance Commissioner — many with fresh ideas to address the ongoing insurance crisis.

Follow our coverage. Learn about the candidates. We can no longer trust insurance companies to do the hard work for us.