Allstate Corp. is set to raise home insurance rates for California customers by an average of 34.1%, marking the largest premium increase by a major insurer in three years as the state grapples with a growing property insurance crisis.
The rate hike, which will take effect in November, will impact approximately 350,000 policyholders across California. Some customers may see their premiums soar by as much as 650%, while others could see their rates drop by up to 57%, according to company filings.
This increase is part of the broader turmoil in California’s insurance market, with major insurers like State Farm and Farmers Insurance scaling back operations, citing rising wildfire costs and decades of regulations limiting rate increases. Allstate, which stopped issuing new homeowner policies in California in 2022, attributed the move to escalating financial risks when it first halted coverage.
"With higher home values, increased repair costs, and more frequent, severe weather, we need to adjust rates to better reflect the cost of protecting our customers," Allstate spokesperson Michael Passman said in an email response. The San Francisco Chronicle previously reported on the rate adjustment, noting that the last major increase was in 2021 when Homesite Insurance was approved for a 38.2% hike.
Allstate’s decision follows a series of rate hikes by other insurers, including State Farm, which is seeking an additional 30% increase after securing a 20% hike earlier this year. The Department of Insurance is currently reviewing State Farm’s latest request, with Insurance Commissioner Ricardo Lara raising concerns about the company’s "financial condition."
The rising premiums and shrinking coverage are deepening California’s housing affordability crisis, pushing more homeowners to turn to the state’s FAIR plan, the insurer of last resort.
To stabilize the market, Lara is advocating for reforms that would allow insurers to consider climate change costs and reinsurance expenses when setting rates. In exchange, insurers would be required to offer more coverage in wildfire-prone areas.
Consumer Watchdog, an advocacy group that opposed Allstate’s rate increase, criticized the company for not disclosing the computer model used to calculate surcharges based on wildfire risk. As part of the negotiations, Allstate agreed to introduce new discounts for homes fortified against wildfires and to reveal how wildfire risk scores contribute to premiums.
