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6d ago

California Greenlights State Farm’s Emergency Insurance Rate Hike

Insurance Commissioner Ricardo Lara approves interim rate increases effective June 1, citing financial strain from January wildfires.

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 will implement a 17% increase for homeowners, 15% for condo owners and renters, and 38% for rental properties starting June 1.
  • This is the first emergency interim rate hike approved in California, aimed at stabilizing State Farm's finances after $7 billion in wildfire claims.
  • The company will receive a $400 million cash infusion from its parent organization to address financial challenges.
  • A full evidentiary hearing in October will determine if the interim hikes are justified, with potential refunds required if they are not.
  • Consumer advocates and wildfire survivors criticized the decision, raising concerns about claim-handling practices and affordability for policyholders.