The request comes just months after it won approval to raise rates by 7% and 20% earlier this year.
State Farm is again seeking to raise California homeowners’ insurance premiums — this time by an average 30%.
The insurance giant, the largest provider in the state, is asking regulators to approve what would appear to be its steepest-ever rate hike in California, affecting more than 1.2 million homeowners. The request comes just months after the company won approval to raise rates by 7% and 20% earlier this year.
Also see: Home insurance at $10,000 a year shows California buyers’ pain
State Farm says the rate hike is necessary to shore up its financial situation following billions of dollars in losses caused by destructive wildfires and other catastrophic weather events. The company is asking permission to raise premiums as soon as the beginning of next year, though it could take longer to secure approval.
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Under the current proposal, nearly all impacted policyholders would see their premiums go up between 25% and 35%. State Farm’s proposed rate increase would boost premiums by hundreds, if not thousands, of dollars, depending on the price of a homeowner’s current coverage.
State Farm insures roughly one in five homes statewide.
Consumer advocates called on the California Department of Insurance to closely scrutinize the evidence State Farm is providing to support the request before deciding whether to approve it.
“A 30% increase is going to be a massive blow to homeowners’ pocketbooks,” said Consumer Watchdog Executive Director Carmen Balber.
In addition to raising homeowner premiums, the company last week asked the California Department of Insurance for permission to raise rates by 52% for renters and 36% for condo owners.
“State Farm General is working toward its long-term sustainability in California,” the company said in a statement to news organizations. “Rate changes are driven by increased costs and risk.”
Also see: Allstate says it will insure California homes again, under one condition
California’s insurance rates are tightly regulated and, as a result, far lower than in many other states. The insurance industry, citing a series of destructive wildfire seasons and rising building costs, argues the rules have become untenable.
In recent years, providers, including State Farm, have ended coverage for hundreds of thousands of policyholders in fire-prone areas, even as regulators approved new rate hikes. Homeowners unable to find traditional policies have been left to buy into the exorbitantly expensive FAIR Plan, the state’s insurer of last resort.
State Farm, along with other large insurers, including Allstate, have even stopped writing new home insurance policies anywhere in California. It was unclear whether State Farm would restart writing policies if it wins approval on the rate hikes.
I own a house that sits on block from a major intersection and a shopping center. My insurance holder stated that because I was close to a major fire hazard they would either increase or drop my policy.
Understand with the last 3 major fires in Santa Barbara there has never been even a close call for my house.
Some thing is very very wrong. I point a direct finger at the Democrats/eco-environmentalist whako’s who refused to allow proactive fire management. Now we see the inability to have reasonable fire breaks and staging areas have led to massive forest and brush fires.
Thank you so much you idiots that voted for Democrats.