HousingWireHousingWire
Homeowners in California with an insurance policy from State Farm could see a 22% rate hike. The insurer sent a letter to the California Department of Insurance on Monday that described its “dire” financial situation due to the wildfires in Los Angeles County and a request for an “emergency” insurance rate hike.
In addition to the 22% rate hike for owners of single-family homes, State Farm is also requesting an emergency rate hike of 15% for condominium owners and a 38% rate hike for rental homes. If approved, the new rates would go into effect May 1.
State Farm covers 20% of the wildfire-affected areas in LA County. So far, State Farm said it has received more than 8,700 claims and paid out more than $1 billion to customers in Southern California.
In March 2024, State Farm was granted a 20% rate increase. That same month, the company announced that it would not be renewing more than 70,000 policies in California. Additionally, it said it was withdrawing completely from offering commercial apartment policies, which impact multifamily property owners but not renters insurance policies. At the time, this resulted in State Farm shedding about 2% of its policies in California.
The company also requested a 30% rate hike in July 2024, but it was never approved.
California’s Department of Insurance regulates insurance premium rates in the state. Insurers are required to request a rate hike from the state prior to implementation.
In May 2023, State Farm announced it was no longer accepting applications for new homeowners insurance policies in California. In a statement about its decision, State Farm cited increased risks from wildfires, as well as rising reinsurance and rebuilding costs.
