If your home is covered by State Farm, you could soon face a 22% rate increase. In a letter sent to the California Department of Insurance on Monday, the company requested an emergency rate hike.
“That’s a huge hit for people that have State Farm currently,” said Olga Cicuto, Morro Bay resident.
Following the Los Angeles wildfires, State Farm says it has paid more than $1 billion and expects to pay out more.
“We are one of the most expensive states to build in,” said Janet Ruiz, Insurance Information Institute Director of Strategic Communication.
The company is asking for permission to increase rates so they can rebuild capital to keep providing coverage.
“All we are asking for in the industry is adequate rates so that we can pay claims and expenses,” Ruiz said.
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State Farm issues 2.8 million policies in the state. But in 2024, they chose not to renew tens of thousands of policies.
Cicuto had renter’s insurance with State Farm while she lived in San Luis Obispo but when she recently moved to Morro Bay, the company did not renew her.
“Because it was coupled together with my car insurance, I had to get everything new,” Cicuto said.
“We have come to a point where the insurance industry has been in a crisis. People have received non-renewals from companies they’ve been with for quite a while,” Ruiz said.
State Farm declined to be interviewed for this story. In their letter to the California Department of Insurance, they said, “We must appropriately match price to risk. That is foundational to how insurance works.”
Homeowners aren’t the only ones that could be affected. The company is also requesting a 15% rate increase for condo owners and a 38% increase for rental dwellings.
“Particularly in California where the rent is already high, I don’t know how students or young families can afford that type of increase,” Cicuto said.
According to the Insurance Information Institute, the average insurance premium in California was $974 in 2014, and 10 years later in 2024, it was $1,750.
“In losses and expenses, we’re taking in a dollar but spending a dollar and nine,” Ruiz said. “Companies who have asked for rate increases last year have still not received them, so while it seems like it’s related to the fires, it’s really related to the need to continue doing business in California.”
If the increase is approved by the California Department of Insurance, the rate change will be effective upon renewal on or after May 1.
