The California Department of Insurance, Consumer Watchdog and State Farm General Insurance Co. on Friday reached a three-party settlement agreement that advances the process of approving a rate increase for homeowners and tenants.

The agreement now goes to an administrative law judge for approval and confirms California Insurance Commissioner Ricardo Lara’s order granting State Farm’s request for an emergency interim rate increase with these modifications:

• Homeowners policies: The interim rate of 17% will remain in place with no additional impacts to policyholders beyond the currently approved interim rate.
• Rental dwelling policies: The previously approved interim rate of 38% will be reduced to 32.8%, “resulting in a rate refund for affected policyholders with 10% interested back to June 1, 2025,” according to the Insurance Department. 
• Condominium policies: Rates will decline from 15% to about 5.8% — policyholders will receive refunds and 10% interest back to June 1, 2025.
• Renters insurance policies: The renters subline will slightly rise to around 15.65% from a currently approved 15% interim rate.
• Refunds with interest: Consumers whose rates were reduced also will get refunds with 10% interest retroactive to June 1, 2025.

Officials said the settlement agreement follows months of public review and negotiation called for by Lara under the voter-approved Proposition 103 rate hearing process.

When he called for the hearing on March 14, 2025, said in a statement, “To resolve this matter, I am ordering State Farm to respond to questions in an official hearing, promoting transparency and a path forward.”

State Farm representatives were required to provide detailed financial information and testimony regarding the company’s rate request and financial condition, after the Eaton and Palisades fires in Los Angeles County, as part of the Proposition 103.

Friday’s agreement also extends the moratorium on nonrenewals and cancellations for homeowners, rental dwelling, condominium and renters’ policies for at least one more year.

“This rate hearing process reflects the strength of California’s transparent and long-standing consumer protections,” Insurance Department spokesman Michael Soller said in a statement. “Our Department’s role is to carefully review the data and hold insurance companies accountable so Californians are not paying more than is justified.”

Officials provided this timeline for the settlement process:

• March 6: Parties file the settlement agreement with the Administrative Law Judge.
• March 20: Supporting declarations to be filed with the Administrative Law Judge.
• April 7 estimated: Proposed independent decision issued by the Administrative Law Judge if no additional evidence is requested.
• Following the proposed decision, Lara will review it and make a final determination. 
• “At a later date, Consumer Watchdog may submit a request for intervenor compensation for its participation in the rate review and settlement process, as authorized under Prop. 103,” according to the Insurance Department. “If approved, the compensation amount — to be paid by State Farm policyholders — will be determined through a separate review process.” More information about the intervenor compensation process on the Department’s website.

The Department of Insurance is also continuing a review of State Farm General’s claims-handling practices and compliance with state law. Results from that examination were expected in the coming months.