State Farm is facing bad-faith allegations over its handling of a high-value wildfire claim tied to the 2025 Palisades Fire.
On December 29, 2025, homeowner Enoch Arhinful filed a lawsuit in the US District Court for the Central District of California, accusing State Farm General Insurance Company of breaching his homeowners’ policy and acting in bad faith after his Pacific Palisades property was allegedly damaged in the January 2025 blaze.
The case arises from the Palisades Fire, which, according to official sources cited in the lawsuit, ignited on January 7, 2025, in the Pacific Palisades area of Los Angeles. Authorities ultimately reported 23,713 acres burned, 6,837 structures destroyed, 973 structures damaged, 12 confirmed civilian fatalities, 3 civilian injuries and 1 firefighter injury. The filing describes the Palisades Fire as the third most destructive California wildfire on record.
Arhinful alleges that he and his family evacuated their home at 212 Surfview Drive on January 7 under Los Angeles County evacuation orders, leaving behind most of their possessions. The lawsuit claims that for nearly a month, embers struck exterior components of the property and that soot, ash and toxic wildfire debris infiltrated the house through vents, gaps and the HVAC system. The residence is described as contaminated throughout its interior surfaces, contents, ducting, insulation and mechanical systems, rendering it uninhabitable.
The lawsuit states that Arhinful held a State Farm homeowners policy in force from April 20, 2024, to April 20, 2025, with total applicable limits of $4,683,785. That includes $1,993,100 for dwelling coverage, $996,550 in extended replacement cost, $199,310 for other structures, $199,310 for building ordinance or law coverage, $99,655 each for trees, shrubs and landscaping and debris removal, $498,275 for personal property and $597,930 for loss of use.
Under Section I – Losses Insured, the policy lists “Fire or lightning” and “Smoke, meaning abrupt and accidental damage from smoke” as covered causes of loss. For Coverage A – Dwelling, State Farm agrees it “will pay for accidental direct physical loss to the property described in Coverage A, unless the loss is excluded or limited in SECTION I – LOSSES NOT INSURED or otherwise excluded or limited in this policy.” For Coverage C – Loss of Use, the policy promises to pay “the reasonable and necessary increase in cost incurred by an insured to maintain their normal standard of living for up to 24 months” when a covered loss makes the residence uninhabitable.
Arhinful alleges he reported the loss to State Farm on or about January 21, 2025, and that the insurer accepted coverage and issued an advance payment of $168,000. Over time, the filing says, State Farm also referenced an “ALE advance $168,000” while disputing other components of the claim. The lawsuit contends that the insurer has delayed essential environmental testing for ten months, labeled major portions of contractor estimates as “not warranted,” and failed to pay a $3,610 invoice for flood mitigation work intended to protect the property from further damage.
The filing further alleges that State Farm relied on Xactimate software to reassess the cost to remediate property damage even though, as described in the lawsuit, the program’s end-user agreement states its pricing database does not include adjustments for surge-pricing conditions after widespread disasters and does not warrant the accuracy of its pricing information. The lawsuit claims that, despite estimates remaining below policy limits, State Farm refused to pay the full amounts necessary to remediate and repair the residence.
Arhinful also alleges that his claim was transferred among multiple adjusters, including to a third-party adjuster, resulting in a lack of continuity and repeated delays. The filing characterizes this, along with the handling of additional living expenses and testing, as part of a broader pattern and practice. It notes that the California Department of Insurance and Los Angeles County have ongoing probes into State Farm’s wildfire claims handling.
According to the lawsuit, State Farm continues to withhold at least $319,881.12 in benefits, including remediation costs and additional living expenses, and the residence remains uninhabitable nearly a year after the fire. Arhinful seeks damages for breach of contract, damages for alleged bad faith, punitive damages, attorneys’ fees and a court declaration confirming coverage for his fire, smoke, soot, ash and contamination-related losses.
State Farm has not yet presented its response in court, and no court has made any findings or determinations on the merits.
