State Farm is going back to California's regulator for a higher homeowners rate increase.
One week after State Farm General, the California division of the State Farm parent company,
State Farm General had filed with the California Department of Insurance (CDI) seeking a 30% increase, but later lowered that request to 22%. Now the insurer is seeking the full 30% increase again – in the form of an additional average increase of 11%. This additional increase may be higher or lower depending on whether the home is owned, a rental or a condo. A hearing is scheduled for October.
In response, CDI's press office said in a statement, "State Farm's request for a rate increase isn't new. It's the same one they filed in June 2024, originally asking for 30%. The judge approved an interim 17% increase based on evidence presented in a hearing in April. A full rate hearing on the same request is still scheduled to get to the facts. They want more? 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 General will have to show it needs the increase, according to Dan Veroff, policyholder counsel at Merlin Law Group. "The Department of Insurance wants to see State Farm prove, financially, this additional increase is supported, and that it will result in State Farm taking back
Veroff's colleague, Derek Chaiken, an attorney at Merlin Law Group, called for more concessions by State Farm. "Before approving the filing, the Department of Insurance should scrutinize State Farm's financial justification and require measurable give-backs—such as commitments to continue writing in high-fire-risk ZIP codes, lower deductibles, and maintain adequate coverage—so homeowners are not paying more for less protection," Chaiken stated. "Experience from recent wildfires shows that piecemeal fire coverage through the FAIR Plan is confusing and often inequitable for policyholders; if State Farm wants higher premiums, it should also commit to easing the FAIR Plan's burden."
The new State Farm General request highlights the problems of California's insurance market, according to T.J. Helmstetter of the Insurance Fairness Project.
"We can't rate hike our way out of the insurance crisis. The absurdity and outrageousness of State Farm asking for another hike, just one week after getting one, is proof that the companies will keep coming back for more and more," he stated in an email response. "The reality is that this crisis is driven by climate change and a failure of leadership at every level. We can't expect it to be solved on the backs of ordinary Americans who are just trying to pay their mortgage or their rent. It's time for the federal and state governments to take this crisis seriously and offer real solutions to protect people."
