A group of property owners affected by the January wildfires has filed a lawsuit against major California insurance carriers, including State Farm, the state’s largest insurer. The lawsuit, filed in Los Angeles Superior Court, alleges that these insurers violated California’s antitrust and unfair competition laws by colluding to force homeowners into the California FAIR Plan, the state’s insurance plan of last resort.
The Lawsuit’s Claims
The plaintiffs claim that major insurers, who are required by law to back the FAIR Plan, conspired to cancel policies for homeowners in fire-risk zones, leaving them underinsured and forced into the FAIR Plan. This plan has higher premiums and lower coverage limits compared to commercial market plans.
The FAIR Plan was established after the 1965 Watts riots to provide insurance for homeowners in high-risk areas. However, due to increasingly disastrous fires, the plan has become overwhelmed. The number of FAIR Plan policyholders has grown from 200,000 in 2020 to nearly 560,000 as of March 2025.
Consequences for Homeowners
The lawsuit alleges that insurers have reaped the benefits of high premiums while depriving homeowners of adequate coverage. Homeowners across California, not just those in fire-prone areas, are facing increased premiums due to the FAIR Plan’s financial strain. The plan is expected to lose $4 billion on claims related to the January fires.
Consumer Watchdog’s president, Jamie Court, stated that the insurers’ actions were a “concerted attempt to push people in high-risk areas to lower benefit policies while keeping higher premiums from everyone else.” The plaintiffs are seeking triple damages for their losses.
The lawsuit highlights the ongoing issues with insurance coverage in California’s wildfire-prone areas and the strain on the FAIR Plan. As the situation continues to unfold, the outcome of this lawsuit could have significant implications for homeowners and insurers alike.
