State Farm, Farmers and Other Top Insurance Companies Sued for Violating California Antitrust Laws: Shernoff Bidart Echeverria LLP

Alleged conspiracy to force homeowners onto CA FAIR Plan led to significant underinsurance after devastating January wildfires

LOS ANGELES, April 22, 2025 /PRNewswire/ -- Shernoff Bidart Echeverria LLP and Larson LLP filed two complaints in Los Angeles County today against major California insurance carriers on behalf of property owners impacted by the wildfires that devastated the Pacific Palisades, Malibu, and Altadena areas in January. The lawsuits allege violations of California's antitrust and unfair competition laws through a conspiracy which eliminated existing and standard property policies and forced homeowners to accept, as their only available coverage, the state's insurance plan of last resort, the California FAIR Plan.

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. 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.

The lawsuits allege that California insurance companies, including State Farm, Farmers, and the top 25 insurance companies (who together enjoy approximately 75% of the market share) began limiting their coverage 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. This left homeowners woefully underinsured, resulting in many suffering massive uncovered losses from January's wildfire disaster.

Every insurance carrier licensed to operate in the state of California must fund the FAIR Plan proportionally according to their market share. At the time of the January wildfires, the plan had significantly inadequate reserves to cover a catastrophic wildfire – funding levels that were determined by the insurance companies as the only voting members of the FAIR Plan's Governing Committee. 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.

As a result of the insurance companies' conspiracy, each of the homeowners in today's complaint, Todd Ferrier et al. v. State Farm Group et al., found themselves underinsured with pricier policies providing far less coverage for properties they had previously been able to adequately insure. After the fires, the gap between their actual property losses and the limits of their FAIR Plan policies amounts to millions of dollars that would have been covered under their previous, dropped policies.

The second lawsuit, Anthony Canzoneri v. State Farm Group et al., asserts claims on behalf of a class of insurance consumers who were forced to pay exorbitant rates for inferior coverage after the insurers' misconduct forced them to obtain limited coverage from the FAIR Plan.

"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. "The complaints allege that, 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."

Stephen G. Larson of Larson LLP stated: "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." Larson added, "We look forward to litigating these claims so plaintiffs can rebuild what was lost and also to end the group boycotts that we believe have tainted and upended the market for insurance in Los Angeles County."

The homeowners represented by Larson LLP and Shernoff Bidart Echeverria LLP are seeking compensatory and treble damages, as well as an injunction preventing insurance companies from engaging in further anticompetitive behavior.

About Shernoff Bidart Echeverria LLP
Shernoff Bidart Echeverria LLP is a leader in protecting policyholders from insurance company abuse. The firm has been protecting the rights of insurance consumers, both individuals and businesses, for 50 years and has contributed greatly to legal precedent requiring insurance companies to act in good faith.

About Larson LLP
Larson LLP is an elite litigation firm committed to achieving success in any courtroom. A fierce advocate for our clients, Larson LLP attorneys litigate complex civil cases, including insurance coverage disputes related to other recent California wildfires.

Contact Law Firm: 800-458-3386

SOURCE Shernoff Bidart Echeverria LLP