The Blubber

California homeowners, already reeling from last month’s wildfires, could face insurance rate hikes of more than 20% if insured by State Farm.

State Farm, California’s largest private insurer, is proposing an average 22% rate increase for homeowners. In a letter urging the California Department of Insurance (CDI) to "immediately approve" the request, the company argued that the hike is necessary to "avert a dire situation."

Wildfire Damage and Rising Costs
State Farm is seeking to raise rates by 22% for non-tenant homeowners, 15% for renters and condo owners, and 38% for rental properties. According to its open letter to the CDI, the increased rates would take effect on May 1, 2025.

"As of February 1, State Farm General (Fire only) has received more than 8,700 claims and has already paid over $1 billion to customers," the company stated in a press release. "State Farm General will ultimately pay out much more, as these fires represent the costliest disasters in the history of State Farm General."

Insurance Crisis in California
The Eaton Fire in January 2025 destroyed thousands of homes across Pasadena and Altadena, fueled by powerful Santa Ana winds. These same winds also forced President Joe Biden to cancel his planned trip between Los Angeles and Riverside.

The growing risks have prompted State Farm to reassess its pricing structure. The company explained that rate increases are essential to maintain the ability to pay future claims and remain solvent, given the heightened risk in California.

"We must raise rates to reflect the growing risk in California," the company said. "We look forward to working with regulators, policymakers, and industry leaders to create a sustainable insurance environment—one that balances risk and cost while ensuring long-term stability."

Ongoing Controversy
State Farm previously faced backlash for a March 2024 decision to stop renewing 72,000 home and apartment policies. In a letter to the CDI at that time, State Farm warned that the depletion of its capital was "a grave signal of the urgent need for rapid and transformational action."

The company’s recent actions reflect the broader challenges facing the California insurance market, where rising natural disaster risks have caused several carriers to reduce or cease coverage in the state altogether.