Consumer Watchdog has filed a lawsuit against the California Department of Insurance and its commissioner to stop State Farm from applying “surcharges” to cover claims from recent firestorms in Los Angeles. The lawsuit challenges a plan approved by the commissioner in 2024, allowing insurance companies to pass costs to policyholders through the FAIR Plan. Consumer Watchdog argues that homeowners in California could be responsible for up to $500 million in assessment costs due to recent fires. The group is asking the court to order the commissioner to not approve any surcharges. This decision, according to the lawsuit, was made without public input and violates administrative rules. State Farm is also seeking an emergency rate increase of 22% for homeowners, 15% for renters and condos, and 38% for rental dwellings. The insurer has faced over $7.9 billion in claims following the fires. The California Insurance Commissioner requested that State Farm pause homeowner non-renewals and pursue a capital infusion to stabilize financially. State Farm intends to implement the rate increase on June 1, affecting over 1.2 million policyholders in California.
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