L.A. homeowners sue insurance companies over wildfire coverage

Homeowners in Los Angeles are suing major insurance companies, claiming the companies worked together to cancel fire insurance after a series of destructive wildfires. The lawsuits say 25 insurance companies, including State Farm, stopped offering coverage in high-risk areas, which forced many people to buy expensive insurance from the state-run FAIR Plan instead.

The lawsuits were filed in April 2025, a few months after wildfires in January burned nearly 18,000 buildings and killed at least 30 people in L.A. Homeowners who lost everything are accusing the insurance companies of breaking the law by acting together to stop selling or renewing policies in wildfire zones like Pacific Palisades and Altadena.

One lawsuit represents people who were directly affected by the fires. Another lawsuit includes all homeowners who were pushed into the FAIR Plan after January 2023. The FAIR Plan is a state-run program that’s supposed to be a last resort, but more and more people are being forced to use it.

“By colluding to push plaintiffs and so many like them to the FAIR Plan, the defendants have reaped the benefits of high premiums while depriving homeowners of coverage that they were ready, willing, and able to purchase to ensure that they could recover after a disaster like January’s wildfires,” Michael J. Bidart, attorney for homeowners, said.

The FAIR Plan is expensive and offers less protection than private insurance. As of March 2025, more than 555,000 homes are covered under this plan — double the number from just a few years ago. The program is under pressure and may not be able to cover future claims if wildfires keep happening.

State Farm, California’s biggest home insurer, has lost $7.6 billion because of wildfire claims this year alone. It has already paid out $1.75 billion and is asking state regulators to approve a 17% rate increase to help recover losses. The company had originally asked for a 22% increase.

In some areas, like Pacific Palisades, homeowners say their coverage was canceled with little notice. A separate lawsuit filed in San Diego says Liberty Mutual unfairly canceled policies based on satellite photos. The photos wrongly suggested that some homes were not maintained, and Liberty Mutual refused to renew the policies. The lawsuit could affect at least 17,000 homeowners.

As wildfires become more common because of climate change, insurers are pulling out of risky areas in California and other states. Experts warn if things don’t change, we could look at an “uninsurable future.” This means more people might be left without good insurance options, especially in disaster-prone areas.

The insurance companies named in the lawsuits deny the claims. The American Property Casualty Insurance Association called the lawsuits baseless. California’s Department of Insurance hasn’t taken a side but says the system needs to be fairer and transparent. The department is also reviewing State Farm’s request for a rate hike, which may allow companies to use more modern tools like risk models. 

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