State Farm, California’s largest home insurance provider, is grappling with significant challenges that have prompted the company to propose substantial rate increases across various policies in the state.
In a filing to the California Department of Insurance, State Farm’s subsidiary requested hikes as follows: homeowners insurance by 30%, condo policies by 36%, and renter’s policies by a staggering 52%.
“These rate changes are essential for State Farm General Insurance Company to ensure its long-term sustainability in California,” the company explained in a statement to FOX Business. “They reflect increased costs and risks, necessary for fulfilling our commitments to customers.”
Last year, State Farm announced a halt to new home insurance applications in California, citing unprecedented rises in construction costs and inflation. In March, the company revealed plans to cancel 72,000 home and apartment policies due to regulatory costs, inflation pressures, and heightened risks from natural disasters.
California’s Insurance Commissioner, Ricardo Lara, labeled the situation a “crisis” last year and has expressed renewed concerns following State Farm’s latest rate hike proposals.
“State Farm General’s recent rate filings raise serious concerns about its financial stability,” Lara stated. “These decisions could impact millions of California consumers and the integrity of our residential property insurance market.”
Lara emphasized that any rate increases would require approval from the California Department of Insurance. Previously, the department approved a 6.9% rate hike for State Farm in January 2023, and a separate intervenor group endorsed a 20% increase for State Farm’s homeowners and condo policies in December.
“We are committed to thorough scrutiny using all available investigatory tools to assess State Farm’s financial standing,” Lara reiterated. “We are dedicated to ensuring transparency and protection for California policyholders.”
Contributions to this report by FOX Business’ Chris Pandolfo.
