State Farm’s 17% rate hike adds pressure to California homeowners in fire zones

UNINCORPORATED ESCONDIDO (KGTV) — State Farm has received approval to raise home insurance rates by an average of 17% across California, creating additional financial pressure for homeowners in high-risk fire zones.

State Farm gets approval for 17% premium increase for homeowners

In unincorporated Escondido, homeowners have already been paying premium rates for insurance in recent years, and this latest increase could make living in fire-prone areas increasingly unaffordable.

Doug Dill, a homeowner in unincorporated Escondido covered by State Farm, worries about the long-term implications of rising insurance costs.

“This particular area has a very high fire hazard area,” Dill said.

“So you’re paying the highest rate possible for insurance,” I noted.

“That’s correct, kind of a tough pill to swallow,” Dill said.

This marks the second time State Farm has raised rates since March of last year. The latest emergency rate hike was approved by Insurance Commissioner Ricardo Lara after a judge ruled it was justified due to State Farm’s “extraordinary financial distress” that “threatens ongoing business operations” in the state.

“There might be a time in the future where we have to decide, well we can’t afford to live in this environment anymore because of the cost of living,” Dill said.

Carmen Balber with Consumer Watchdog criticized the approval process, noting that rate increases typically follow a more rigorous public review.

“You have to show what you’ve paid in claims, and the trend you expect those future claims to follow. State Farm didn’t do any of that in this rate increase,” Balber said.

Balber believes State Farm’s hike should be delayed until after its scheduled hearing in October.

“Other insurance companies will look at State Farm and say ‘hey they did it’, we should do it too. I want my money now, we’ll worry about proving it up later,” Balber said.

Commissioner Lara released a statement addressing the decision: “I am balancing all the facts. Protecting all State Farm customers and the integrity of our insurance market is an urgent matter.”

Despite the financial strain, Dill expressed gratitude that his policy hasn’t been canceled altogether.

“Living in a very high fire hazard area, I’m very pleased to have insurance. So if I have to pay a penalty, I’m willing to do that,” Dill said.

The interim rate increase goes into effect on June 1.

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