California: State Farm Requests Another Rate Increase in 2025
California homeowners and drivers may soon face higher insurance premiums as State Farm, the nation’s largest home insurer, has filed for another rate hike in the state. This request comes just months after the company paused accepting new home insurance policies in California due to growing risks and rising costs.
Why Is State Farm Asking for a Rate Hike?
State Farm says it’s struggling to keep up with the rising cost of covering claims, especially due to:
- Wildfires and natural disasters
- Increased construction and repair costs
- Higher cost of reinsurance
- Inflation-related expenses
The insurer argues that the current rates don’t match the level of risk they’re taking on, especially in high-risk wildfire zones.
💸 What This Means for Californians
If approved, the new rate hike could increase homeowners’ premiums by double digits in some areas. While the exact percentage hasn’t been finalized, past increases requested by State Farm have ranged from 15% to 28%.
This could affect:
- Homeowners insurance
- Condo and renters insurance
- Possibly auto insurance in the future
📈 A Trend Among Big Insurers
State Farm is not alone. Other major insurance companies like Allstate, Farmers, and USAA have also scaled back their operations or increased prices in California due to:
- Climate-related risks
- Regulatory constraints
- Market instability
Some insurers have even stopped writing new policies altogether in the state.
🏛️ What Is the State Doing About It?
California’s Department of Insurance is currently reviewing State Farm’s request. The agency can approve, modify, or reject any proposed rate changes under Proposition 103, which requires insurers to justify increases.
Consumer advocates are urging the department to scrutinize the request closely, citing affordability concerns for millions of residents.
🧠 What You Can Do
If you’re a policyholder in California, here’s how to stay prepared:
✅ Shop around for competitive quotes from smaller or regional insurers
✅ Improve your home’s safety features to qualify for discounts (like fire-resistant roofing)
✅ Monitor your policy and talk to your agent regularly about rate changes
✅ Consider bundling policies to reduce total insurance costs