Firefighters work to contain wildfires near Eaton Canyon in California on Thursday, January 9, 2025. Photo: Amanda Bronstad/ALM.
State Farm customers impacted by the 2025 wildfires in California and the 17% rate hike for homeowners insurance that followed will likely pay the same for coverage following a three-party settlement on March 6.
State Farm, the California Department of Insurance and Consumer Watchdog reached the three-party agreement in a hearing to determine State Farm's request.
"The agreement will provide financial relief to many policyholders while ensuring continued coverage for State Farm policyholders while California's insurance market stabilizes," according to the California Department of Insurance.
The settlement agreement is currently being reviewed by an impartial administrative law judge and follows months of public review and negotiation called for by California Insurance Commissioner Ricardo Lara under the state's voter-approved Proposition 103 rate hearing process.
To date, State Farm insures roughly 250,000 homes and 880,000 automobiles in LA County. The company insures over one million homes and more than four million autos across the state.
"Many Californians are worried about home insurance right now. When a home is often a family's largest investment, questions about coverage and cost can feel deeply personal," a State Farm spokesperson told PropertyCasualty360.com.
"With this agreement the interim homeowners rate increase of 17%, which went into effect in June 2025, will become final pending approval," the spokesperson said. "This rate enables State Farm General to continue serving existing California customers. We will continue to monitor our capacity to support the risks we insure and maintain the financial strength needed to pay claims and support customers and communities when it matters most."
Under the settlement agreement reached between the California Department of Insurance, State Farm, and Consumer Watchdog, the Commissioner's prior order granting State Farm's request for an emergency interim rate increase has been confirmed with the following modifications:
- Homeowners (non-tenant) policies: The interim rate of +17.0% will remain in place, meaning there will be no additional impact 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.
- Condominium policies: Rates will be reduced from 15.0% to approximately +5.8%, which means policyholders will receive refunds and 10% interest back to June 1, 2025.
- Renters insurance policies: The renters subline will see a slight increase to approximately +15.65% from a currently approved interim rate of 15.0%.
- Refunds with interest: Consumers whose rates were reduced will also receive refunds with 10% interest retroactive to June 1, 2025.
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