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California Insurance Regulator Grants Conditional Approval for State Farm Rate Hike

State Farm must justify the 22% premium increase at an April hearing and agree to pause policy cancellations to stabilize its finances.

FILE - An aerial view shows the devastation from the Palisades Fire on beachfront homes Wednesday, Jan. 15, 2025 in Malibu, Calif. (AP Photo/Jae C. Hong, File)
FILE - A property burned by the Eaton Fire is seen Thursday, Feb. 6, 2025, in Altadena, Calif. (AP Photo/Ethan Swope, File)
California Insurance Commissioner Ricardo Lara has approved, on a preliminary basis, State Farm General's request to raise home insurance rates by an average of 22%.
In an aerial view, an emergency vehicle (C) drives past destroyed homes as the Palisades Fire continues to burn on Jan. 09, 2025 in Pacific Palisades, California. Multiple wildfires fueled by intense Santa Ana Winds are burning across Los Angeles County. At least five people have been killed, and over 25,000 acres have burned. Over 2,000 structures have also burned and almost 180,000 people are under orders to evacuate. (Photo by Mario Tama/Getty Images)

Overview

  • California Insurance Commissioner Ricardo Lara conditionally approved a 22% average home insurance rate hike for State Farm, subject to a public hearing on April 8.
  • State Farm must pause non-renewals of homeowner policies through 2025 and seek a $500 million capital infusion from its parent company to address financial instability.
  • The rate hike follows $7 billion in claims from recent Los Angeles wildfires, which significantly depleted the insurer’s financial surplus.
  • If approved, the new rates would take effect on June 1, impacting homeowners, renters, condo owners, and rental property policies with increases ranging from 15% to 38%.
  • Consumer Watchdog, a consumer advocacy group, opposes the hike, arguing State Farm's financial issues stem from internal mismanagement and reinsurance practices.