Farmers Insurance has been approved to raise rates in California as part of the state's Sustainable Insurance Strategy.
Farmers announced this week that its new homeowners insurance rating plan will raise rates statewide by an average of 1.5%. The plan will go into effect Sept. 15.
Farmers said new or existing customers who choose to bundle insurance plans with the carrier will see greater savings, with discounts increasing from 15% to 22%. Those who bundle will see flat or decreased rates, Farmers said. It is also planning to offer discounts for policyholders who take wildfire mitigation steps.
"We continue to see encouraging signs that the California insurance marketplace is strengthening and we want to be well-positioned to grow and provide improved coverage offerings to California consumers," said Behram Dinshaw, president of personal lines for Farmers Insurance, in a statement. "Together, our new homeowners and auto rating plans provide consumers with multiple opportunities to save, especially through increased discounts for bundling policies."
The rate increase is part of Farmers' participation in California's Sustainable Insurance Strategy, which was launched by Insurance Commissioner Ricardo Lara in 2025. The plan allows insurers to set rates based on forward-looking catastrophe models in exchange for writing more policies in areas considered at high risk of wildfire.
The goal is to increase insurance options for consumers while also providing some relief for the state's FAIR Plan. The FAIR Plan is meant to be the state's insurer of last resort, but as carriers have pulled back from California, enrollment has swelled. The FAIR Plan had 668,609 policies in force as of last December, up 146% since September 2022.
Farmers said it plans to add several thousand new policies in the next two years in areas identified as distressed in the state. The carrier says it has already seen a 10% year-over-year increase in new business writings in those areas.
"Farmers is proud to be one of the few home insurers that never stopped offering new home policies in the state and we remain committed to the California marketplace," Dinshaw said. "It's also important to note that we have been able to stay in the market and continue to serve our customers because key stakeholders, including the California Department of Insurance, have remained steadfast in working toward meaningful solutions to reinvigorate the state's insurance marketplace."
Photo credit: Diego M. Radzinschi/ALM
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