California Insurance Commissioner Ricardo Lara approved an emergency rate hike request by State Farm that will allow the company to increase premiums on homeowners, renters and landlords.
The insurance provider requested the emergency increase earlier this year in the wake of the devastating Palisades and Eaton fires that erupted during a January windstorm.
The fires, which are among the costliest natural disasters in U.S. history, made international headlines and destroyed billions of dollars in property.
Under the approval agreement, State Farm must receive an immediate $400 million cash infusion from its parent company to address its serious financial condition and is precluded from issuing any new block non-renewals through the end of 2025, the Commissioner stated in a news release.
“Let me be clear: We are in a statewide insurance crisis affecting millions of Californians,” Lara said. “Taking this on requires tough decisions. This is not a game. This is not a media-driven moment for some to exploit — this impacts people I am committed to protecting.”
The 17% approved increase on homeowners’ polices is five percent lower than the 22% initially requested by State Farm. The decision also allows for rate hikes of 15% for condo and renters insurance and 38% for landlord rental-dwelling insurance, the Los Angeles Times reported.
The emergency rate increase takes effect June 1, with a full rate hearing scheduled to start at a date to be determined.
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