State Farm Adjusts Illinois Insurance Rates: Lower Auto, Higher Home Premiums

State Farm Insurance is implementing significant insurance rate changes across Illinois, decreasing auto insurance premiums and increasing home insurance costs. Auto insurance rates will drop by an average of 5.7%, with some policyholders seeing reductions up to 15%, reflecting projected lower claims costs and market trends.

These changes will affect both new and existing policies as of July 18. Conversely, home insurance rates are increasing due to rising home replacement costs and a higher frequency of severe weather events, which drive up claim costs. Illinois homeowners will now face a mandatory minimum 1% wind/hail deductible to mitigate rising premiums for wind and hail-related losses. Existing policy deductibles will still apply for other types of losses.

State Farm cites data showing that in 2024, for every dollar collected in homeowner’s premiums, it paid out $1.26, indicating an unsustainable claims payout ratio. Illinois ranked second nationally for reported hail damage claims, with $638 million in charges, behind Texas. The insurer emphasizes that home insurance premiums in Illinois are specifically priced for state-related risks, excluding losses from other perils such as wildfires, earthquakes, and hurricanes. These adjustments reflect broader trends in loss patterns, repair costs, and claims frequency, illustrating the ongoing challenges insurers face in balancing risk exposure and premium adequacy in a changing environment.