State Farm approved for 22% rate hike in California

California Insurance Commissioner Ricardo Lara has provisionally approved a 22% rate increase for State Farm, one of the largest home insurers in the state. This decision comes as many residents are facing rising home insurance costs or losing their coverage altogether, driven by financial struggles related to wildfires. Lara stated that the emergency rate hike is necessary due to "unprecedented times." State Farm has been overwhelmed with claims from recent wildfires, totaling over $1 billion as of early February. The company expects to pay out approximately $7.6 billion related to these losses and has warned that without this rate increase, it cannot sustain future claims. State Farm covers more than 1 million homeowners in California. The company described the provisional rate increase as a "step in the right direction" to rebuild its capital. However, they still need to provide evidence for the rate hike at a public hearing on April 8. Many residents impacted by the wildfires have expressed concerns about insufficient insurance coverage. Some had their policies canceled before the disasters occurred, which has added to the anxiety regarding insurance availability. State Farm previously dropped around 1,600 policies in the Pacific Palisades and more than 2,000 in other areas at risk. The situation reflects a broader trend among private insurers in California, including Allstate and Farmers Insurance, who are withdrawing policies or stopping new ones. As a result, many homeowners may have to rely on the state-backed FAIR plan, which provides basic insurance for properties that private insurers will not cover.