Just a few months after announcing that it would discontinue over 72,000 home policies across California, State Farm Insurance is seeking permission from the state government to increase insurance rates as much as 50%.
The largest insurer in California sought to raise homeowners' insurance policies by 30%, condo policies by 36% and renters' policies by 52%, according to its filing to the state Department of Insurance.
“Rate changes are driven by increased costs and risk and are necessary for State Farm General to deliver on the promises the Company makes every day to its customers,” the company said in a statement. “We continue to look for ways to maintain competitive rates and help our customers manage their risk.”
While climate risk and increasing concerns about potential wildfires were some of the reasons behind the latest request, State Farm may be trying to nudge the state of California to keep up with inflation, a consumer advocate said.
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“Part of the issue is insurers are claiming they haven't received fast enough rate increases from the Department of Insurance,” Joel Laucher with United Policyholder, a non-profit group, said. “And there are several complications there that probably resulted in some slowdowns of approvals.”
Even for homeowners who are insured by other companies, their bills have seen a huge spike in recent months.
That includes Susanne Solimann, who said she fought to keep her insurance policy after the company threatened to drop her, claiming that the tree hanging over her roof as well as bushes next to her Glendale home posed a risk.
“It’s really stressful. Something has to be done because I worry about what I’m going to do in five or 10 years,” said Solimann, adding her insurance rates went up by a couple hundred dollars even after she spent several thousand dollars to get the vegetation cleared to keep her insurance.
“I’m not going to work forever, and what if I can’t afford my homeowner insurance policy? There are people that are making the choice to live without insurance, which we’re in California, anything can happen.”
State Farm’s rate increases still need to be approved by the California Department of Insurance, which could take several months.
Consumer advocates recommend people try and work with their insurance companies for ways to save or shop around to other companies if it gets too expensive.
