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4mo ago

California Approves State Farm’s Emergency Insurance Rate Hikes

The unprecedented decision allows State Farm to raise premiums starting June 1 to address financial strain from January wildfires, pending a full hearing in October.

FILE - The devastation from the Palisades Fire is shown in an aerial view in the Pacific Palisades neighborhood of Los Angeles, Monday, Jan. 27, 2025. (AP Photo/Jae C. Hong, File)
A State Farm insurance company sign sits amid the rubble of a building destroyed by the Palisades Fire on Sunset Boulevard in the Pacific Palisades neighborhood of Los Angeles on January 16, 2025.
A judge has cleared the way for State Farm to proceed with a significant rate hike in California that it has sought for months. However, the California Insurance Commissioner still has the final say.
FILE - A firefighter battles the Palisades Fire as it burns a structure in the Pacific Palisades neighborhood of Los Angeles, Jan. 7, 2025. (AP Photo/Ethan Swope, File)

Overview

  • State Farm received approval for interim rate hikes of 17% for homeowners, 15% for renters and condos, and 38% for rental dwellings, effective June 1, 2025.
  • The decision follows a judge's recommendation and Insurance Commissioner Ricardo Lara's adoption of the ruling on May 13, citing the insurer's financial distress after $7 billion in wildfire claims.
  • State Farm has paid over $3.51 billion in claims related to the January Los Angeles County wildfires and is handling more than 12,600 claims as of mid-May.
  • A $400 million capital infusion from State Farm’s parent company is part of the approval, aimed at stabilizing the insurer’s finances.
  • The rate hikes are provisional, with a full evidentiary hearing set for October 2025 to determine if the increases are justified or require refunds to policyholders.