California insurance regulators have “provisionally approved” State Farm’s request for a massive rate hike for homeowners following the devasting Los Angeles wildfires.
On Friday, Insurance Commissioner Ricardo Lara announced he will allow State Farm to raise homeowners’ rates by an average of 22%. The state’s largest insurer also won approval to increase premiums by 15% for renters and condo owners and 33% for rental owners.
However, Lara said the “emergency interim” rate hikes can only go through if the company can provide data to justify the increases in a public hearing scheduled for April 8.
The insurer’s California-only subsidiary, State Farm General, says the hikes are necessary to pay out future claims after it expects to cover $7.6 billion in estimated losses from the devastating Los Angeles wildfires. The company said it can cover the staggering damage in Southern California but must raise rates to shore up its shaky financial health.
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“State Farm claims it is committed to its California customers and aims to restore financial stability,” Lara said in a statement. “I expect both State Farm and its parent company to meet their responsibilities and not shift the burden entirely onto their customers.”
Lara also called on State Farm General to stop canceling homeowners’ coverage and ask for $500 million from its parent company to stabilize its financial situation.
It’s unclear how much premiums could increase in the Bay Area or which parts of the region would see the largest rate hikes. Statewide, the insurer covers roughly 15% of homes, totaling more than 1 million homeowner customers.
This story will be updated.
