SACRAMENTO, Calif. — Two of California's biggest homeowners insurance companies — Allstate and State Farm — want to raise rates an average of at least 30%.
ABC10 has been reporting on California’s growing homeowners insurance crisis for years now, as policies become more expensive and harder to find. Seven of the state’s largest home insurers have limited or paused business in California in the past couple of years, citing the growing risk of wildfires, rising cost of construction costs and cumbersome regulations.
Reporting by the San Francisco Chronicle this week reveals Allstate is requesting the largest homeowners insurance rate hike by a major insurer in the past three years.
The company is asking the California Department of Insurance (CDI) permission — as it’s legally required to do — to raise the cost of homeowners insurance policies an average of 34.1%, CDI tells ABC10. That average represents a huge range across some 350,000 policyholders. Some customers could pay less by as much as 57%, if the plan is approved. But at least one homeowner’s rate would increase by 647%.
“Just because they are asking for these rates, number one: it's not going to happen tomorrow, and number two: it has to be approved; every single part of it has to go through the Department of Insurance,” said insurance expert Karl Susman, of Susman Insurance Agency.
It could be months before CDI makes a decision on Allstate’s request, which the company originally submitted back in April 2023.
Allstate told the Chronicle, “our payments to help California residents recover from accidents and disasters have increased significantly in recent years due to higher repair costs, more frequent and severe weather and legal system abuse.”
Allstate’s last approved increase was an average of 4% back in April 2023, according to CDI. Prior to that, it had a 6.9% increase in both 2021 and 2019.
State Farm, California’s largest home insurer, submitted a more recent filing just two weeks ago seeking an average increase of 30% for homeowners insurance, 52% for renters and 36% for condominium owners.
“Interestingly enough, State Farm’s request at 30% is slightly different because they are asking for their increase not based on anything other than financial solvency, which is a slightly different process they have to go through,” said Susman.
State Farm says it’s “working toward its long-term sustainability in California. 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.”
California Insurance Commissioner Ricardo Lara said in a written statement, “State Farm General’s latest rate filings raise serious questions about its financial condition. This has the potential to affect millions of California consumers and the integrity of our residential property insurance market. Using my authority under Prop. 103, I will investigate State Farm’s financial situation… Nothing changes today for State Farm policyholders as a result of these filings. We are going to lead with facts to make sure Californians are protected.”
State Farm’s last approved increase was an average of 20%, which was approved in late 2023 and went into effect in March 2024.
“As bad as it is to hear about policies and rate increases being submitted, there should also be a part of you that says, ‘Okay, there's activity, right? Where there's activity, there's the potential for change,’” said Susman.
These possible changed could be more insurers returning to do full business in California, which can ultimately lead to more competitive prices.
A deadline for some major policy overhauls is coming up. Back in September, California Lara unveiled something called the Sustainable Insurance Strategy.
It’s a package of proposed regulations that would give insurance companies more and better tools for accurately pricing premiums. In turn, the department says, customers would see a big improvement in the availability of insurance policies, as well as more credit for the work they’ve done to protect their home against wildfires.
Lara says his goal is to get these regulations in place by the end of the year.
