State Farm General, California’s largest home insurer, is seeking to increase home insurance rates by a total of 30% following a recent 17% hike approval. The 17% increase, approved by Insurance Commissioner Ricardo Lara, will take effect in June. This decision came after the Los Angeles wildfires, which led to significant financial losses for the company.
State Farm initially requested a 30% increase in June 2024 but agreed to a temporary 17% hike during a recent hearing. Now, the company plans to request an additional 11% increase to return to its original proposal. The insurer will also seek higher rates for condominium owners and renters, with proposed increases of 36% and 52%, respectively.
The company argues that these hikes are necessary to recover from financial distress caused by the wildfires, which resulted in over $7 billion in claims. State Farm plans to defend its rate hike request at a full rate hearing scheduled for this fall. If approved, the new rates could take effect in 2026.
State Farm’s request has faced opposition from consumer advocacy groups, including Consumer Watchdog, which argues that the hikes are unjustified. Deputy Insurance Commissioner Michael Soller emphasized the need for transparency and data to ensure consumers are not overcharged.
The decision to approve the initial 17% increase was described by Administrative Judge Karl-Fredric Seligman as a necessary measure to stabilize State Farm’s financial condition. Commissioner Lara stated that the rate hikes are a critical first step in maintaining the insurer’s ability to serve California customers.
State Farm has promised to refund the emergency rates if the final approved rates are lower. The insurer’s financial position has been under scrutiny, with a decline of $5 billion in its surplus account over the past decade. The upcoming hearing will determine if the requested rate hikes are justified.
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