CALIFORNIA – California Department of Insurance (CDI) commissioner Ricardo Lara approved an emergency rate increase for State Farm General upon the outcome of a public hearing on April 8.

State Farm asked to raise rates 22% for homeowners, 15% for renters, 15% for condo owners, and 38% for landlords, that could go into effect June 1, 2025.

According to State Farm, it has received more than 8,700 claims and already paid more than $1 billion to customers for the recent wildfire disaster in Los Angeles County. The company also told CDI its finances had gotten much worse in 2022 and 2023.

In February, Lara said that the burden was on State Farm to show why the rate increase is needed and it had not met its burden.

At a private meeting on March 11, Lara proposed approving State Farm’s request for a temporary 22% rate increase while all parties prepare for a full rate hearing.

Rate hikes translates to $600 per policyholder annually

Consumer Watchdog said it will prosecute the case against State Farm at the hearing.

“It’s a victory for consumers that State Farm will now have to make its case in a public hearing before a judge and prove a rate hike is justified,” said Consumer Watchdog executive director Carmen Balber.

According to the advocacy group, the 22% rate increase translates into $600 per policyholder annually for homeowners across California.

Balber goes on to say that State Farm has failed to back up its request, and unless it proves otherwise the outcome of a hearing should be a rejection.

‘Finally get to the bottom of State Farm’s financial condition’

Lara said the department will ‘finally get to the bottom of State Farm’s financial condition’ during the public hearing.

As a condition of the rate hike, the commissioner also asked State Farm to stop canceling existing policies until the end of 2025 and secure a $500 million capital infusion from its parent company, State Farm Mutual, to strengthen its finances.

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