Monday, July 28, 2025

Wildfire Survivors in Altadena and the Palisades Face Second Crisis: Insurance Delays

Lake Avenue in Altadena, Wednesday, Jan. 8, 2025. [Eddie Rivera / Pasadena Now]

Delayed payments, denied claims and rate hikes are compounding financial and emotional fallout from January’s wildfires

Survivors of the January Palisades and Eaton wildfires are confronting a second catastrophe: delayed, denied or slashed insurance payouts that have stalled recovery and pushed many toward financial ruin.

Former Insurance Commissioner and current U.S. Representative John Garamendi condemned the crisis as “systemic bad-faith behavior” that “undermines the very promise of recovery” at a July town hall in Altadena.

The California Department of Insurance launched a formal market-conduct exam into State Farm’s claim practices in June, following more than 1,000 complaints. Survivors detail experiences of repeated adjuster turnover, below-market estimates and unexplained denials.

One homeowner, writing to Commissioner Ricardo Lara via the Eaton Fire Survivors Network, reported, “We’re on our seventh adjuster. Each time we make progress, another one shows up and says we have to start over.”

Survivors describe “fantasy” rebuild estimates pegged at $350 per square foot—about 40 percent below market rates, they said—and claim State Farm withheld code-upgrade coverage until rebuilding began. In one reported case, a $876,354 insurance check was held for 10 days reportedly die to the insurance company’s negative account balances.

Temporary housing costs average $5,200 per month, yet additional living expense payments often lag 60 to 90 days. A Los Angeles Times tally found $67 million in recovered payments—but only after repeated Department of Insurance interventions. Still, survivors contend many claims remain unresolved. As one noted, Department officers “have barely resolved a single claim.”

The financial strain has driven Eaton Fire survivors to raise more than $22 million via GoFundMe. At least 15 percent of Altadena victims have sold vacant lots to private investors. Depopulation looms, with 1,200 homeowners still displaced; private equity firms are reportedly offering $4 million for double lots near Loma Alta Park. Residents fear gentrification and cultural displacement, especially among long-standing Black families.

Rate hikes are compounding the crisis. The Department of Insurance approved a 17 percent emergency increase for State Farm customers effective July 1, despite survivor objections. More than 1,600 policies in the Palisades—69 percent of the area—were non-renewed ahead of the hike, threatening future insurability.

California’s January wildfires caused an estimated $45 billion in insured losses, making it the costliest disaster in state history. Between 2020 and 2022, insurers had already canceled or failed to renew over 500,000 policies in Los Angeles County, with industry-wide rate hike requests averaging 9 to 12 percent.

In response, California Assembly Speaker Robert Rivas has drafted legislation to expedite wildfire claims, now under committee review. At the federal level, Garamendi is exploring broader disaster-insurance reforms and holding town halls in affected districts.

Altadena and the Palisades are national bellwethers. As California sets precedents on insurance accountability, survivors warn the consequences could spread: “If major carriers can delay or underpay claims without serious penalty, every American who pays premiums will be at risk.”