California Approves 22% Rate Hike for State Farm Home Insurance

California regulators have tentatively approved State Farm’s request to increase home insurance premiums by an average of 22%, a decision impacting nearly a million homeowners. This move is part of the ongoing insurance crisis in California, driven by rising wildfire risks and the resulting financial losses for insurers. State Farm, having paid out over $2 billion in claims following recent fires, argues that the rate hike is necessary for financial stability, but it must be justified in a public hearing set for April. 

Insurance Commissioner Ricardo Lara has imposed conditions on the approval, ensuring that policy cancellations are paused and the rate increase is transparently justified. As California’s insurance market struggles with soaring claims and wildfire risks, major insurers like State Farm have halted new policies and are reviewing existing ones. If the rate increase is approved in the April hearing, it will take effect on June 1, leading to increased premiums for homeowners and rental property owners.