State Farm Requests Emergency 22% Rate Hike from California Insurance Department

February 4, 2025 TruthUSA

The largest home insurer in the state is requesting an additional 22 percent emergency rate increase after receiving a 20-percent increase the previous year.

On February 3, California’s largest home insurer filed a request with the state’s insurance department for a 22 percent emergency rate hike, following an influx of claims after the devastating wildfires in Los Angeles County last month.

In a press release issued Monday, State Farm stated, “We help people recover from unexpected events. This is exactly what we are doing in the aftermath of the wildfires.”

As of Saturday, the insurer had received over 8,700 claims from homeowners and disbursed more than $1 billion to its clients in the wake of the Palisades and Eaton fires that ignited on January 7.

The wildfires resulted in the loss of at least 29 lives and caused the destruction of over 16,000 homes and other structures, marking it as potentially the most expensive fire in California’s history.

Damage and economic fallout from the fires are predicted to exceed $250 billion, surpassing the total losses from California’s entire 2020 wildfire season, according to estimates from AccuWeather.

State Farm anticipates ultimately paying out far more, as these fires are expected to become the most costly disasters in the company’s history, the statement revealed.

The insurer has requested the California Department of Insurance to promptly authorize temporary rate hikes to help avert a “dire situation” for over 2.8 million policyholders in the state, including 1 million State Farm homeowners.

If the request is approved, the new rates would take effect following policy renewals after May 1, according to the company.

“The cost of insurance in California will rise for customers going forward due to the greater risk involved,” stated State Farm in the release.

This rate adjustment intends to bolster State Farm’s capital, which is currently low, the company explained. Insufficient capital could lead to downgrades by rating agencies, putting the company’s home insurance policyholders at risk regarding mortgage protections.

Over the past nine years, the insurer claims to have expended $1.26 for every dollar earned, leading to more than $5 billion in underwriting deficits.

In January 2024, the state’s insurance department granted State Farm a rate increase of 20 percent for homeowners’ policy renewals.

Contractors for the Environmental Protection Agency (EPA) remove household hazardous waste as they search through homes damaged and destroyed by the Eaton Fire in the Altadena neighborhood of Los Angeles County, California, on Jan. 30, 2025. (Patrick T. Fallon/AFP via Getty Images) — Contractors for the Environmental Protection Agency (EPA) remove household hazardous waste as they search through homes damaged and destroyed by the Eaton Fire in the Altadena neighborhood of Los Angeles County, California, on Jan. 30, 2025. Patrick T. Fallon/AFP via Getty Images

In 2023, the company announced it would cease accepting new business for casualty and property insurance while still offering new auto policies in the state.

Another major insurer, Allstate, has also halted the issuance of new policies for commercial and residential properties. Other insurers have similarly withdrawn from the market, pointing to the state’s strict regulations that hindered rate increases.

The California Department of Insurance has not provided an immediate response regarding State Farm’s request for an emergency rate hike as of Monday.

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