State Farm Seeks Rate Increase for California Homeowners
California homeowners could soon face higher insurance bills. State Farm General Insurance, the state’s largest home insurance provider, has requested a 22% average rate increase. The company attributes the need for the increase to financial strain caused by recent wildfires, particularly those in the Los Angeles area.
State Farm defended the proposed hikes, emphasizing the growing risks associated with natural disasters. “State Farm helps people recover from the unexpected. That is what we are doing in the wake of the wildfires. As of February 1st, State Farm General (Fire only) has received more than 8,700 claims and has already paid more than $1 billion to customers. State Farm General will ultimately pay out significantly more, as collectively these fires will be the costliest disasters in the history of State Farm General,” the company stated.
The California Department of Insurance is investigating the rate request. “State Farm General’s rate filings raise serious questions about the company’s financial situation…The Department will investigate these rate applications thoroughly to ensure Californians are charged the appropriate justified rates,” the department said in a statement.
This request comes approximately a year after State Farm announced it was dropping coverage for thousands of California policyholders, including over 1,400 in San Diego County.
Ron Fischbeck, a policyholder, shared his experience. “They started talking about pulling out of California last year. And so as soon as the policy came up, I wrote the check and sent it the whole thing. And I said, ‘OK, if they do pull out, at least I’m covered for the year,'” he explained. However, he recently received a cancellation notice on one of his policies. “I was expecting the renewal here in the next few weeks. Instead, I got a cancellation letter. It’s frustrating,” Fischbeck said.
Nick Reale, another policyholder, expressed concerns about the rate increases. “To hear after the fires or other catastrophic things these companies making profits are going to increase coverage or threaten to drop, is to me unconscionable,” he said. Reale’s insurance company had threatened to drop his coverage due to an issue with his roof. He is advocating for enhanced customer protections.
State Farm stated they have already paid out over $1 billion to customers affected by the wildfires and that the proposed rate increase would help cover future claims.
Fischbeck, who has been impacted by the changes, understands the frustration surrounding the increases. However, he said that it is better than the alternative. “Things go up. I mean, so the 22% is better than getting dumped and having to find insurance again.”
Pete Moraga, a spokesperson for the Insurance Information Institute, highlighted the difficult environment for both homeowners and insurers, stating that insurance risks dictate premiums. “It’s not just homeowners insurance, you have to understand that all insurance is based on risk. If you have a business in a very high crime area that gets broken into a lot, which we’ve seen a lot, those prices for us are going to go up. So insurance risk rises and our premiums have to rise to meet them.”
County Supervisor Terra Lawson-Remer opposes the rate increase. In a statement, she said, “Families, homeowners, and businesses deserve stability—not skyrocketing rates and broken promises. I stand with San Diegans in demanding that insurers and state regulators take action before even more people are left without coverage. I continue to call on State Farm to be a better neighbor.”
