Tips for homeowner’s insurance claims during the California wildfires
As wildfires rage through Southern California, here is what residents should know about filing insurance claims.
- California regulators had approved State Farm General a 17% interim rate increase for the homeowners’ line in May.
- The immediate rate increase was to help “stabilize” State Farm General’s financial condition amid “severe capital depletion,” especially after the Los Angeles County wildfires.
- Last year, State Farm General filed a 30% insurance rate increase for homeowners.
State Farm General says it is “still pursuing” an overall homeowners rate increase of 30%, just a week after the company was granted a double-digit emergency interim rate hike by the California Department of Insurance.
The San Francisco Chronicle first reported that the insurer had “revealed plans to ask regulators for an additional 11% increase.”
This follows California Insurance Commissioner Ricardo Lara’s adoption of a judge’s ruling approving State Farm General a 17% interim rate increase for the homeowners’ line — a reduction from the nearly 22% rate increase State Farm General had sought in February, according to a news release from the state insurance department on May 13.
The insurer had sought the 22% rate increase for homeowners policies, among other rate increases, due to its “severe capital depletion,” especially after the Los Angeles County wildfires, according to a Department of Insurance filing.
The average State Farm bill could have increased by $600 a year for homeowners, $163 for condo owners, and $30 for renters, the Chronicle reported.
State Farm General had said on its website that the immediate rate increase was to help “stabilize” their financial condition and serve Californians for the “long-term.” It was not to pay for the costs of wildfires, State Farm General said, but rather a “critical first step” in restoring the company’s financial strength, key for paying future claims.
“We remain deeply concerned about the financial position of State Farm General, as it is difficult to match price to risk in California,” the insurer said in a May update online.
In a February update, State Farm General said its current estimate of direct losses from the wildfires was at approximately $7.6 billion, which accounted for “both reported and not reported claims.”
“While we are pleased that Commissioner Lara approved the interim rate of 17% for State Farm General Insurance Company, this change only addressed part of the original request of 30% filed in June 2024,” the company said in an emailed statement to the Desert Sun on May 20. “The overall request of 30% would not be on top of the 17% interim rate change. State Farm General is still pursuing the full rate request. A hearing on the full rate request is expected to be held this year.”
State Farm General emergency rate hike granted after headwinds last year
Last June, State Farm General disclosed it was seeking a 30% rate increase for home insurance rates in addition to rate hikes for condo owners and renters, the Los Angeles Times-then reported. The move, according to the Los Angeles Times, was to “restore its financial condition.”
Earlier last year, State Farm General announced it would non-renew about 30,000 homeowners, rental dwelling and other property insurance policies.
“This decision was not made lightly and only after careful analysis of State Farm General’s financial health, which continues to be impacted by inflation, catastrophe exposure, reinsurance costs, and the limitations of working within decades-old insurance regulations,” the insurer said.
The emergency rate approved in May followed several months of back-and-forth between regulators and State Farm General.
Consumer Watchdog said it had urged Lara to reject the emergency interim rate increase during a hearing about it in April, saying State Farm General had “failed to meet the legal standard required under California law to justify a mid-proceeding rate hike, and that the proposed settlement would unfairly burden consumers without resolving the insurer’s financial issues.”
The increase takes effect June 1, according to a news release.
Additionally, State Farm General will also get an advance of $400 million under a surplus note from parent company State Farm Mutual.
Paris Barraza is a trending reporter covering California news at The Desert Sun. Reach her at pbarraza@gannett.com.
Alice J. Roden started working for Trending Insurance News at the end of 2021. Alice grew up in Salt Lake City, UT. A writer with a vast insurance industry background Alice has help with several of the biggest insurance companies. Before joining Trending Insurance News, Alice briefly worked as a freelance journalist for several radio stations. She covers home, renters and other property insurance stories.