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State Farm again is seeking huge increases in home insurance rates in California

New York CNN  —  State Farm is seeking increases of as much as 52% for some of its residential insurance rates in California, which could ramp up the financial burden for many homeowners and renters in the state’s troubled insurance market. It’s the third major change for State Farm in California within the last year. The insurer stopped selling insurance for new homes in the state last summer, citing wildfire risks and skyrocketing construction costs. The insurer, California’s largest, is requesting a 30% rate increase for its homeowners line, a 52% rate increase for renters and a 36% rate increase for condominium owners. State Farm was previously approved for a 20% hike for homeowners’ and condominium owners’ policies last December. The company said in a statement that its state subsidiary, State Farm General, is “working toward its long-term sustainability in California” and that the rate increases 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.” “We continue to look for ways to maintain competitive rates and help our customers manage their risk,” a State Farm spokesperson said. “Customers with questions are encouraged to speak with their local State Farm agent. The agent can review the customer’s policy, including deductibles and coverages.” The California Department of Insurance has to approve the rate changes. “State Farm General’s latest rate filings raise serious questions about its financial condition,” California Insurance Commissioner Ricardo Lara said in a statement. “This has the potential to affect millions of California consumers and the integrity of our residential property insurance market.” Laro said his agency “will investigate State Farm’s financial situation, including a rate hearing on these applications if necessary.” He added that “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.” The company made its previous decision to hike rates “due to historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure, and a challenging reinsurance market,” according to a May 2023 statement from State Farm General. (The changes didn’t affect its existing auto insurance coverage.) Homes in Napa, California, US, on Monday, May 6, 2024. David Paul Morris/Bloomberg/Getty Images Related article It’s hurricane season. Good luck getting affordable homeowners’ insurance California has seen an average of more than 7,000 wildfires each year, consuming an average of over 2 million acres, over the past several years, according to data from the governor’s office. Scientists and California authorities blame the climate crisis for the intensity of the fire seasons. A few months following State Farm’s decision to stop offering new home insurance, Farmers Insurance also started limiting new homeowners insurance policies in California, citing high costs and wildfire risks. Farmers is the second-largest provider of homeowners insurance in the state, after State Farm. It’s getting harder and harder to find homeowners insurance in the states that are the most vulnerable to the effects of climate change. In Florida, Farmer’s also recently stopped offering its home, auto and umbrella policies in the hurricane-prone state.