CA's Biggest Home Insurer To Raise Rates 20 Percent

State Farm will increase insurance rates for California homeowners by 20 percent in the coming year, the company confirmed Wednesday.

The state insurance department approved the request from California’s biggest home insurer, the San Francisco Chronicle reported, noting the latest rates for renewed policies will go into effect March 15.

State Farm in 2023 announced it would stop accepting new California homeowners insurance applications, citing the catastrophic wildfires the state has experienced in recent years.

The upcoming rate hike for existing policies is due to “increased costs and risk,” according to the company.

"We continue to look for ways to maintain competitive rates and help our customers manage their risk," State Farm said in a prepared statement. "We are committed to working cooperatively with public policymakers and officials on reforms that promote market stability and the long-term interests of our California customers."

State Farm had California’s largest market share for property and casualty insurance as of 2022, with 8.7 percent, the newspaper reported. The company also that year held more than one in five homeowner policies statewide, according to The Sacramento Bee.

Consumer Watchdog intervened regarding the latest rate hike, which was approved in December, but the organization eventually agreed to the increase, the Bee reported.

State Farm auto insurance rates will rise as well, by 21 percent as of Feb. 26 for California policyholders, while rates for renter’s insurance will spike 11.4 percent, according to The San Francisco Standard.

The increases come in the wake of an exodus of insurance providers from California in recent months. Allstate has stopped offering new policies and some smaller providers have dropped existing policyholders, media outlets have reported.

The state does offer its FAIR Plan, a last-resort option that provides basic fire coverage for high-risk properties.

In September, Insurance Commissioner Ricardo Lara announced a package aimed at improving insurance offerings in the state in tandem with an executive order from Gov. Gavin Newsom urging regulatory action for communities affected by climate change.

The package included a proposal to transition homeowners and businesses from the FAIR Plan back to the normal insurance market with commitments from insurers to cover all parts of California by writing at least 85 percent of their statewide market share in high wildfire-risk communities.