State Farm's outside lawyers are apologizing after a California court dispute over a fire-damaged home was found to include fake legal precedents apparently generated by artificial intelligence.
The incident is drawing fresh attention to how AI tools are being used in high-stakes industries — and what can happen when people rely on them without verifying the results.
Here's what to know
According to the Los Angeles Times, State Farm's attorneys referenced multiple nonexistent cases in motions filed in a Carson insurance dispute.
Those fabricated sources were cited in arguments over how insurance claims should be assessed, the limits of expert testimony, and whether State Farm had to pay for the full extent of the home's damage.
In an Aug. 11 motion, Jacquelene Robinson — an attorney with Musick, Peeler & Garrett, the outside firm representing State Farm — acknowledged that she used Irys, a legal AI company, and submitted the filings without confirming that the case citations were accurate.
"I am deeply apologetic for the above-mentioned submissions and my serious lapse in professional judgment," Robinson wrote.
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"As such, I accept responsibility for those inexcusable errors, and offer no excuse, only an apology."
The problem was first identified by attorney Michael Shaolian, who filed the 2024 case over Fa'alagilagi Meni-Silga's insurance claim. Meni-Silga, a Carson resident, reported that her home suffered major damage first from a house fire and later from a rainstorm.
Once the problem was raised, Musick, Peeler & Garrett said it had identified "nonexistent case citations which appear to have been AI hallucinations" in a group of motions.
More background
The episode also comes as State Farm faces scrutiny in California. The insurer has received recurring complaints from people affected by the Palisades and Eaton fires, who accuse the company of delaying or resisting payouts, including cleanup costs related to fire toxins.
In spring 2026, the California Department of Insurance signaled that it might temporarily bar State Farm from writing policies.
AI tools can help speed up health breakthroughs, improve agricultural practices, and make clean energy systems run more efficiently. However, training and operating AI models require enormous amounts of electricity and water, while misuse, security lapses, and costly mistakes can ripple through society, including higher utility bills and other unintended consequences.
What's being done?
The insurance giant said it is trying to prevent a repeat.
State Farm spokesperson Tom Hartmann asserted that the company is working to ensure "appropriate safeguards are in place to prevent similar errors in the future."
Insurance commissioner Ricardo Lara maintained that regulators found State Farm "delayed, underpaid, and buried policyholders in red tape at the worst moment of their lives."
State Farm has pushed back, saying regulators share responsibility for delays and describing California's homeowners insurance market as deeply dysfunctional.
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