State Farm Asks to Increase California Insurance Prices Again

California insurer State Farm is asking regulators for another rate hike, less than a week after it was granted permission to temporarily charge an extra 17 percent for homeowners' insurance policies.

The company, the largest home insurer in the state, wants the California Department of Insurance (CDI) commissioner Ricardo Lara to approve an additional 11 percent increase for homeowners, and significant hikes for renters and condo owners, according to the San Francisco Chronicle.

In a statement to Newsweek, a spokesperson for State Farm General Insurance Company said: "While we are pleased that Commissioner Lara approved the interim rate of 17 percent for State Farm General Insurance Company, this change only addressed part of the original request of 30 percent filed in June 2024.

"The overall request of 30 percent would not be on top of the 17-percent interim rate change. State Farm General is still pursuing the full rate request. A hearing on the full rate request is expected to be held this year."

Why It Matters

Several major insurers, including State Farm, cut coverage across the state's most at-risk areas over recent years, citing growing costs and rising catastrophe exposure.

Their withdrawals have left California homeowners scrambling for alternatives in a private market with shrinking availability. Many have had no other option but to turn to the state's fire insurer of last resort, the Fair Plan, even though its policies are often less extensive than those offered by private providers.

State Farm says its footing in the state is increasingly shaky and needs to charge more to improve its financial conditions. For California regulators, granting such a request is a difficult choice between shielding homeowners from unreasonable rate hikes and ensuring carriers continue offering coverage in the state.

What To Know

State Farm has long been seeking significant rate hikes in California, where strict regulations have kept premiums artificially low for decades.

In late 2023, the company got the green light to increase its homeowners' policies by an average of 20 percent starting from March 15, 2024. In late June 2024, the company asked for another rate hike of 30 percent for its homeowners' policies, 52 percent for renters, and 36 percent for condo owners.

These requests were still pending when the L.A. County fires broke out in January, affecting thousands of State Farm policyholders in the area.

The insurer said it has received over 12,692 claims related to the blazes and has already paid more than $3.5 billion. It expects to pay a total of $7.6 billion in claims related to the fires.

Following the devastating wildfires, State Farm asked for a temporary emergency rate hike of 22 percent for its homeowners' policies, 15 percent for renters and condo owners, and 38 percent for rental dwellings, claiming the increases were necessary to stabilize the company's weakened financial position.

After a judge's independent review concluded that State Farm was justified in its request, Lara approved the hikes last Tuesday, saying it was crucial to maintain "the integrity" of California's insurance market. These increases will come into effect starting June 1.

What People Are Saying

Deputy Insurance Commissioner Michael Soller, said in a statement to Newsweek: "A full-rate hearing on the same request is still scheduled to get to the facts. We want more data, more transparency, more policyholders served, and more policies written in wildfire distressed areas. State Farm wanting a rate increase doesn't change the law. All rates must be justified so consumers don't pay more than is required."

State Farm, in a statement last week following the regulators' approval of its emergency rate hikes: "We remain deeply concerned about the financial position of State Farm General, as it is difficult to match price to risk in California. As we continue to emphasize in our ongoing interim rate filing, we need immediate rate increases to help stabilize State Farm General's financial condition to be able to serve our California customers for the long-term."

What Happens Next

State Farm will be asked to justify its rate hike requests in a hearing this fall.

If its requests are found to be excessive and unreasonable by a judge, the commissioner could order the carrier to refund policyholders for the emergency hikes already approved, while the additional increases might never be implemented.

Are you a California homeowner? Let me know what you think of State Farm's rate hike requests by contacting me at g.carbonaro@newsweek.com.

Update, 5/21/2025 4:30 a.m. ET: This article has been updated with comment from State Farm and Michael Soller.