State Farm Home Insurance Premiums Set to Rise in California Following Regulatory Approval

State Farm policyholders in California are preparing for increased home insurance premiums after the state’s regulators approved a rate hike. Effective from March 15, the approved adjustment will see an average increase of 20% for renewed policies. This increase is a response to the homeowners loss ratio of 84% recorded by State Farm during the first nine months of 2023. The company’s spokesperson emphasized that the rate changes are essential to manage increased costs and risks.

However, the impact of these hikes will vary depending on the community’s risk level. United Policyholders, a consumer advocacy group, notes that while some homeowners may see minor increases, those in higher-risk areas could face hikes of up to 50% or more. Additionally, renters insured with State Farm are expected to experience an 11% rise on top of the 20% average increase for homeowners.

The California Department of Insurance commented on the increase, reiterating Commissioner Ricardo Lara’s dedication to protecting consumers and ensuring policyholders do not overpay. Despite these increases, State Farm remains the largest home insurer in California, holding 8.7% of the state’s property and casualty insurance market as of 2022. The company had previously halted issuing new homeowner policies in the state, citing concerns over wildfire risks, rising construction costs, and reinsurance challenges.