Policyholders critical of State Farm General’s response to January’s firestorms won a court victory this week when a judge ruled a Pacific Palisades homeowner can probe the insurer’s claims handling practices during a rate hearing.

In doing so, Administrative Law Judge Karl Fredric Seligman denied a motion by the Department of Insurance to move an inquiry into the insurer’s claims practices by Merritt Farren, whose home burned down, to a separate hearing after the rate increase is first considered.

“The outcome could easily result in chaos and challenges … on numerous grounds that would only operate to cause delay,” the judge wrote of the department’s motion in his Wednesday ruling.

State Farm is seeking to raise its homeowner rates 11% after receiving an emergency 17% hike in May from Insurance Commissioner Ricardo Lara, who adopted a decision by Seligman that the insurer deserved the hike given its weak financial position even prior to the fires. State Farm also is seeking increases in other lines of property insurance.

The insurer said this week it has received more than 13,000 claims and paid over $4.5 billion to policyholders. State Farm has said it expects claims payments to top $7 billion from the Jan. 7 fires, but losses under $700 million due to reinsurance agreements with its parent company. State Farm contends an “overwhelming majority” of its local policyholders are satisfied with its services.

However, policyholders led by the Eaton Fire Survivors Network have demanded there should be no rate hike until hundreds of complaints over alleged payment delays, underpayments and claims denials are looked into and resolved — a position also voiced by area legislators at a news conference this week.

Also opposing the increase is Los Angeles advocacy group Consumer Watchdog, which says State Farm’s possible total increase, including the 17% hike it already has received, would cost consumers $1.2 billion.

Farren, 64, a former attorney for Disney and Amazon, was granted permission in July to participate in the rate hearing under a provision of Proposition 103, which regulates the industry and allows for public participation in rate hearings.

He said he was thankful for the judge’s ruling this week, as well as a second decision that gave him time to seek documents from State Farm through the discovery process.

He said any rate increases should be tied to the actual value homeowners receive from their policies, which crucially should include how their claims are handled. “I think it’s completely common sense and that it just really shouldn’t be done any other way,” Farren said.

State Farm spokesperson Bob Devereux, in a statement said, “We thank the judge for the ruling on this matter, and we are looking forward to moving the rate hearing process forward toward conclusion later this year.”

The Department of Insurance also said it looked forward to the rate hearing, which has been delayed and is now set for December.

In court filings, the department has argued that combining the two issues — the proposed rate increase and allegations the company has mishandled claims — could slow review of the rate request, which State Farm has said is critical to stabilize its finances.

The company’s financial strength has been downgraded by ratings agencies, including S&P Global this month. However, the agency said it benefited from its strategic importance to its highly rated Bloomington, Ill., parent company.

The department also maintained that state law calls for handling claims issues through separate proceedings, including a market conduct exam of State Farm General’s practices that Lara announced in June. It said a separate hearing would allow those findings when they are released to be considered with Farren’s own probe of the issue.

Farren said that while he lost his Mount Holyoke Drive home where he lived with this two sons, his request to look into claims practices wasn’t driven by his personal experience with State Farm — which he deemed likely “better than most’’ — but from what he heard from other policyholders.

In particular, he said he wants to look into the insurer’s practices regarding payments for personal property losses and how it calculates building-cost estimates for reconstruction, as well as how it has handled claims for smoke-damaged houses. The insurer has been accused of being “stingy” in handling such claims.

Farren said he has heard of situations in which State Farm has advanced payments for personal property coverage and then after receiving an itemized list of losses, has sought to offset what it has deemed overpayments from future payouts.

Meanwhile, Palisades homeowners have received reconstruction cost estimates under $400 a square foot from State Farm, he alleged, when other insurers are issuing estimates of $800 to $1,200 per square foot.

After the hearing, Joy Chen, chief executive of the Eaton Fire Survivors community group, issued an email to its more than 7,000 members, criticizing Lara for the department’s legal position, saying Seligman had “sided with fairness.”