CA insurance commissioner approves emergency rate hike for State Farm

California approves 17% rate hike for State Farm

California homeowners and renters with State Farm are just days away from a double-digit rate increase

LOS ANGELES - California Insurance Commissioner Ricardo Lara adopted a judge's ruling granting State Farm's request for an emergency rate hike in response to the recent Los Angeles wildfires. 

What we know:

Pending a complete hearing, the order approves a 17% interim rate increase for homeowners, 15% for renters and condominium unitowners, and 38% for rental dwellings. State Farm's original request in February asked for a 21.8% increase for homeowners, however, that was decreased to the current 17%. 

With the ruling, State Farm would receive an immediate $400 million cash infusion from its parent company to address its financial condition. State Farm is also not allowed to issue any new block non-renewals through the end of 2025.

The emergency rate increase, which is temporary, takes effect June 1. A full rate hearing is expected to take place at a later time. 

The backstory:

The insurance company requested an emergency rate increase in February, citing severe financial distress from the LA wildfires. 

State Farm, the state’s largest insurer with roughly 1 million home insurance policies in California, said the emergency rate would help the company rebuild following the wildfires that destroyed more than 16,000 buildings, mostly homes. The company is trying to prevent a "dire" financial situation that executives said could push homeowners into the state’s last-resort insurance option.

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PREV COVERAGE: State Farm asking for another California rate hike

State Farm is asking to hike rates by 17-36% in California, potentially the second rate hike in a year. (April 8, 2025)

A three-day hearing was held in April in which a judge found that "the evidence presented in the hearing established a prima facie showing that State Farm is experiencing extraordinary financial distress, coupled with surplus depletion that threatens ongoing business operations."

Following the hearing, on May 13, the administrative law judge issued a proposed order for the Commissioner’s review and action, which Lara adopted.

Lara issued the following statement, "Californians deserve a process grounded in fairness, transparency, and integrity — not politics or posturing. That is why I requested an independent review of the evidence by an administrative law judge, who presented a proposed decision. I ordered this hearing to ensure that the parties have the opportunity to present their arguments before a neutral arbiter. I am balancing all the facts. Protecting all State Farm customers and the integrity of our insurance market is an urgent matter. Let me be clear: We are in a statewide insurance crisis affecting millions of Californians. Taking this on requires tough decisions. This is not a game. This is not a media-driven moment for some to exploit — this impacts people I am committed to protecting. I expect State Farm provide the highest level of service to its California customers and to fulfill its promises. State Farm must now justify its financial condition and detail its recovery plan in a full rate hearing before a neutral judge and my Department’s experts. I am focused on ensuring that State Farm pays its claims to wildfire survivors fully and fairly – and nothing is off the table."

In Depth: Insurance questions impact fire recovery process

Insurance Expert Karl Susman joins Hal to talk about the insurance issues that are affecting local fire victims.

The other side:

Consumer Watchdog, a nonprofit consumer rights advocacy group, called Laura's decision disappointing. 

"Today’s decision forcing consumers to pay now but allowing State Farm to wait months before having to show its math is a great disappointment for consumers. Voter-approved Proposition 103 says a rate hike shouldn’t come before the rate justification, but that’s what happened here. State Farm policyholders, many of whom are struggling to get their claims paid by the company after the Los Angeles fires, are now facing double-digit rate hikes. Nevertheless, we will fully defend consumers’ right to fair rates in the upcoming hearings where State Farm will finally have to justify what they want to charge," said Carmen Balber, executive director of Consumer Watchdog.