State Farm on Monday requested California state officials approve an emergency interim rate increase, averaging 22 percent for homeowners in the Golden State.
Rental dwelling policies would also face an increase, 38 percent, while tenants would see a 15 percent hike. All changes would be effective May 1 if approved, multiple outlets report.
The requested rate hikes come after destructive and deadly fires rampaged in the Los Angeles area, decimating tens of thousands of acres in Southern California.
State Farm has received more than 8,700 claims and doled out roughly $1 billion, the insurance company said in a letter to California’s commissioner of insurance, Ricardo Lara, obtained by the Los Angeles Times.
It expects to pay “significantly” more as claims continue to roll in. A potential rate increase would allow the insurance company to rebuild its capital base.
“We know we will ultimately pay out significantly more, as these fires will collectively be the costliest in the history of the company,” the letter said.
The California Insurance Commission, in a statement, said it will “urgently” respond to the request, the latest in rate hike requests that raise “serious questions about its financial condition.”
In June 2024, State Farm requested rate increases for homeowner policies (30 percent) condo owners (36 percent) and renters (52 percent), the Times reports.
The insurance company decided to cut new coverage in California, citing inflation, increasing frequency of natural disasters and challenges in the reinsurance market in May 2023.
