California Approves State Farm’s 17% Premium Hike for Homeowners
California’s top insurance regulator has given State Farm the green light to raise premiums by 17% for its approximately 1 million home insurance customers in the state. The decision, made on May 13, 2025, aims to help State Farm rebuild its capital following the devastating Los Angeles wildfires in January.
The insurer had initially requested a 22% rate increase but revised it to 17% during a recent hearing. The increase will also include a 38% hike for rental owners and 15% for tenants, with the new rates taking effect in June. In return, State Farm will receive a $400 million cash infusion from its parent company and agree to halt some nonrenewals through the end of 2025.
Insurance Commissioner Ricardo Lara stated that he expects State Farm to “provide the highest level of service to its California customers and to fulfill its promises.” The approval is considered temporary until the state considers State Farm’s request from last year for a 30% rate increase for homeowners, with hearings scheduled for October.
Consumer Watchdog’s executive director, Carmen Balber, expressed disappointment with the ruling, saying it “would make consumers pay now but allow State Farm to wait months before having to show its math.” State Farm has committed to refunding the emergency rates if California later approves lower rates.
The decision comes as California continues its efforts to encourage insurers to remain in the state amid increasing wildfire risks. Several major companies, including State Farm, stopped issuing new residential policies in 2023 due to high fire risk. Lara introduced new regulations last year to give insurers more flexibility to raise premiums in exchange for writing more policies in high-risk areas, which are now taking effect.
