State Farm asks for another California home insurance rate hike a week after getting a 17% jump
A week after securing approval to raise home insurance rates by an average of 17%, State Farm General revealed plans to ask regulators for an additional 11% increase, as well as considerably higher rates for condo owners and renters.
The 17% increase, set to go into effect in June, was granted last week by Insurance Commissioner Ricardo Lara following a months-long proceeding that was classified as an 'emergency' following the Los Angeles fires.
But State Farm had originally requested a 30% rate hike in June 2024 — and now, with the 17% emergency rate hike approved, it wants to return to its original number. The request, if granted, would go into effect in 2026, amounting to an 11% hike on top of the previous 17%.
A hearing slated for this fall will allow State Farm to argue for justifying the full 30% rate hike it originally sought, according to new documents filed with the state on Monday.
The insurer will also ask for higher increases for condominium owners and renters. In June, rates for those groups are due to go up by an average of 15%, but the new requests would bring that up to 36% for condos and 52% for renters. For rental dwellings policies — a type of insurance that protects landlords who rent out their homes — State Farm is only petitioning for final approval of the 38% rate hike that was initially approved earlier this month.
State Farm did not immediately respond to a request for comment.
'They want more? We want more — more data, more transparency, more policyholders served, and more policies written in wildfire distressed areas,' Deputy Insurance Commissioner Michael Soller said in a statement Monday. 'Wanting doesn't change the law. All rates must be justified so consumers don't pay more than is required.'
Though State Farm agreed to lower its rate hike request on an interim basis to 17% during a recent hearing before an administrative law judge, the full 30% was never off the table, said Carmen Balber, executive director for consumer advocacy group Consumer Watchdog.
Balber's group participated in the rate review process and opposed the 17% rate hike at the April hearing. On Monday night, she said the group had not yet reviewed the new data submitted by State Farm to see whether it justified the large price hikes it's asking for.
During the hearing, Lara pushed State Farm to secure a $400 million loan from its national parent company, State Farm Automobile Insurance Co., and to hold off on non-renewing large numbers of customers at once until at least the end of 2025. But Balber noted they made such a promise with only seven months of the year to go.
'What I think is clear from today's rate filing is that the commissioner didn't win anything for Californians in this proceeding,' Balber said.
The newly filed documents include data on State Farm's losses from the Los Angeles wildfires. The insurer previously said it expects to pay $7.6 billion in claims from the Eaton and Palisades fires, all but $400 million of which will be paid by its national parent company through its reinsurance agreements — insurance for insurance companies.
State Farm has maintained that those losses would warrant a large price hike. When insurance companies apply for rate increases, they let regulators know the maximum increase they feel they could justify under a formula enshrined in state insurance code. It is typically much larger than the rate request they actually ask for.
In State Farm's case, it initially told regulators last June it could justify an up to 32.8% hike for homeowners while requesting the 30%. Its latest filing documents indicate the insurer believes its maximum permitted rate hike would be 77%.
At the fall hearing, State Farm will be required to defend its requested rate hikes using facts and data, Soller said. A judge could approve the full requests, or the judge could find that even the emergency approved rates were excessive. In that case, the commissioner would order State Farm to refund its customers.
'Commissioner Lara ordered a full rate hearing to get to the bottom of State Farm's rate increase request,' Soller said. 'At the end of the day this is about making sure claims are paid in full and quickly by insurance companies with the financial standing to do that. State Farm will have to justify their rate request and show us their recovery plan in a full rate hearing.'
The already-approved rate hikes will appear on homeowners' bills at their next renewal date following June 1. An additional rate increase, if approved, would take effect at each customers' first renewal in 2026.
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