State Farm, the largest homeowners’ insurance provider in California, is seeking approval to raise premiums by an average of 30%, affecting over 1.2 million policyholders. The company cites significant losses from destructive wildfires and other catastrophic events as the reason for the rate hike. Consumer advocates are calling for a close review of the evidence supporting the increase, as it could result in a significant financial burden for homeowners. State Farm’s proposed hike would increase premiums by hundreds or even thousands of dollars for most policyholders.
This latest request comes on the heels of earlier rate hikes of 7% and 20% approved earlier this year. The company is also seeking increases of 52% for renters and 36% for condo owners. The insurance industry as a whole in California is facing challenges due to rising building costs and devastating wildfires, resulting in insurers like State Farm ending coverage for policyholders in fire-prone areas.
The California Department of Insurance will be scrutinizing State Farm’s financial situation and justification for the rate hikes. The department is also working on new regulations that would allow insurers to adjust rates based on climate change risks in exchange for expanding coverage in high-risk wildfire areas. Public hearings and potential challenges from consumer groups are expected before any rate hikes are finalized.
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