California Approves State Farm’s 17% Home Insurance Rate Hike Amid Wildfire Losses
- Bay Area Real Estate Insider
- May 15
- 2 min read
California homeowners insured by State Farm will see a 17% increase in their premiums starting June 1, 2025, following approval from the state's Insurance Commissioner Ricardo Lara. This decision comes in the wake of significant financial losses the insurer faced due to recent wildfires in Los Angeles County.
Originally, State Farm requested a 21.8% rate hike but agreed to a reduced 17% increase after discussions with regulators. In addition to homeowners, condo owners and renters will experience a 15% increase, while rental property owners face a 38% hike. These adjustments aim to stabilize State Farm's financial position after the company reported over $3.5 billion in claims and a $5 billion reduction in surplus over the past decade.
To support its California operations, State Farm's parent company will provide a $400 million infusion. Furthermore, the insurer has agreed to halt new non-renewals of residential policies through the end of 2025. A full rate hearing is scheduled for October, where the company must justify the increases and may be required to issue refunds if the hikes are deemed excessive.
Consumer advocacy groups have criticized the decision, arguing it places an undue burden on policyholders without sufficient transparency. Carmen Balber, executive director of Consumer Watchdog, expressed concern that consumers are being asked to pay more before State Farm fully justifies the need for higher rates.
This rate increase marks State Farm's second in California since March 2024, reflecting the broader challenges insurers face in the state due to escalating wildfire risks and regulatory complexities.
Sources:
Hamanaka, Kari. “State Farm Gets OK From Insurance Commissioner for 17% Hike.” The Real Deal, May 13, 2025. Link
“California Approves State Farm's Request for 17% Premium Increase for Homeowners.” AP News, May 14, 2025. Link
“State Farm Can Hike California Home Insurance Rates, Officials Rule.” San Francisco Chronicle, May 13, 2025. Link
“CA Approves State Farm's Emergency Rate Hike; Increases as High as 38% Start June 1.” ABC7 News, May 14, 2025.