A nearly $900,000 insurance check from State Farm failed to clear for more than a week, raising alarm for an Altadena, California, homeowner still displaced by January’s wildfires.
Amelia McDonald, a veteran insurance defense attorney, deposited a check for $876,354.07 on June 30. But by July 9, the funds were still unavailable.
A Chase bank representative told her the account associated with the State Farm-issued check had “insufficient funds” and a negative balance, according to a report from nonprofit news organization CalMatters.
“It’s just stunning,” McDonald told CalMatters. “I’ve been working for insurance companies for more than 20 years. I’ve never had a check bounce to a claimant in 25 years of practice.”
On July 10, the check finally cleared. A bank manager reportedly told McDonald the hold was due to uncertainty over whether the funds would go through.
State Farm denied any funding shortfall.
“After review on our end, we see no indication why the bank would not release the funds to our customer,” a spokesperson told CalMatters in an email.
A day later, spokesperson Tom Hartmann reiterated, “State Farm General had and continues to have the funds available to meet our commitments to customers. We can’t speculate on what the bank may have said to our customer or its processes regarding the release of funds.”
State Farm has acknowledged that claims from the Los Angeles-area wildfires have severely impacted its finances. On Monday, the company said it has paid out $4.2 billion on roughly 13,000 claims related to the disaster.
In May, State Farm received emergency state approval to raise its rates — citing a credit-rating downgrade and potential threats to solvency. It has since canceled or declined to renew tens of thousands of policies in California.
McDonald’s home and ranch were destroyed in the fire — displacing her as well as her father, daughter and surviving livestock. A second check for $335,527.40 intended for personal belongings lost and deposited into a different bank account cleared without issue, CalMatters report.
The California Department of Insurance has opened an investigation into McDonald’s case amid broader concerns about the insurer’s handling of claims.
Department spokesperson Michael Soller confirmed the inquiry but declined CalMatter’s request for comment on the payment delay. According to an email reviewed by CalMatters, a compliance officer gave State Farm five days to respond.