As Southern California works to heal from wildfires that devastated homes, businesses and more, two legal complaints were filed this week alleging that major insurance companies have conspired to forced homeowners to accept limited coverage.

Law firm Shernoff Bidart Echeverria LLP said in a Monday press release that, along with law firm Larson LLP, filed the complaints in Los Angeles County. They claim that insurance companies – including State Farm, Farmers, and the top 25 insurance companies (who together enjoy approximately 75% of the market share) – violated California’s antitrust and unfair competition laws.

In the release, the law firm said the conspiracy worked to eliminate existing and standard property policies, essentially forcing homeowners into the only available coverage, the California FAIR Plan. That state plan is intended to be a plan of last resort.

“The California FAIR (Fair Access to Insurance Requirements) Plan was created to offer insurance to property owners who cannot get coverage due to wildfire or other risks,” said Shernoff Bidart Echeverria. “It provides limited coverage compared to traditional insurance, and payouts are capped at $3 million. On average, premiums are more than double the cost of a typical home insurance policy in the state.”

According to the Los Angeles County Economic Development Corporation, the 2025 Los Angeles wildfires resulted in total property damages estimated between $28 billion and $53.8 billion. Figures from the corporation indicate that more than 5,000 single family homes and 361 mobile homes were destroyed in the Palisades fire, while more than 6,000 single family homes and 12 mobile homes were destroyed in the Eaton fire. These fires impacted residents in the Pacific Palisades, Malibu, and Altadena areas.

“By colluding together to cancel existing policies and refusing to write new ones, the insurers were able to force property owners onto the FAIR Plan with its drastically lower coverage limits,” Shernoff Bidart Echeverria said. “This left homeowners woefully underinsured, resulting in many suffering massive uncovered losses from January’s wildfire disaster.”

One of the suits, Todd Ferrier et al. v. State Farm Group et al., concerns a group of people who allegedly found themselves underinsured with pricier policies providing far less coverage for properties they had previously been able to adequately insure. In fact, the gaps in their property loss and the limits of FAIR amount to millions of dollars. The other, Anthony Canzoneri v.
State Farm Group et al., concerns a class of insurance consumers who were allegedly forced to pay exorbitant rates for inferior coverage after the insurers’ misconduct forced them to obtain limited coverage from the FAIR Plan.

Per the firm, every insurance carrier licensed to operate in California is required to fund the FAIR Plan proportionally according to their market share. However, it said that when the wildfires tore through Southern California, the plan had significantly inadequate reserves to cover a catastrophic wildfire. Funding levels were determined by the insurance companies as the only voting members of the FAIR Plan’s Governing Committee, the firm added.

“The California Department of Insurance agreed in 2024 to allow insurers to pass 50% or more of any additional funds required for coverage to customers in unaffected areas in the form of higher premiums, further incentivizing the insurers’ push to force homeowners onto the FAIR Plan,” it said.

In addition to compensatory and treble damages, plaintiffs are seeking an injunction preventing insurance companies from engaging in anticompetitive behavior as alleged in the complaints.

“Insurance is a product that homeowners hope never to need, but rely on for peace of mind in normal times and for critical help rebuilding after a catastrophe,” said Michael J. Bidart of Shernoff Bidart Echeverria LLP.

Stephen G. Larson said: “California’s antitrust and unfair competition laws exist to address the very kind of conspiracy and collusion that the complaints allege the defendants engaged in, depriving homeowners of the competitive and adequate insurance products necessary to fully protect them from the losses sustained during this year’s fires.”

Meanwhile, representatives for the insurance industry have disputed the claims.

“These suits defy logic, advance meritless claims, and we are going to focus on solving the challenges in the insurance market in California,” said Stef Zielezienski, chief legal officer for the American Property Casualty Insurance Association, in a statement.

He said APCIA has “consistently opposed the creation and expansion of state property residual plans such as the California FAIR Plan,” and that “insurers are ultimately on the hook for the liabilities of such plans,” in the statement. Furthermore, Zielezienski claimed that “APCIA fully complies with all applicable antitrust laws and has legal counsel monitoring every member call and meeting for that purpose.”