The California Department of Insurance, State Farm, Consumer Watchdog agreed on rate request from the carrier to raise homeowners rates.
The interim rate of 17% will remain in place, meaning there will be no additional impact to policyholders beyond the currently approved interim rate, according to the CDI. State Farm, California’s largest homeowners insurer, got approval for a 17% rate increase following billions of dollars in losses from the L.A. wildfires and a pullback on writing new policies in the state. State Farm upped its rate request in May.
The three-party settlement agreement in the rate hearing proceeding underway to review State Farm’s emergency rate request. The agreement is now set to be reviewed by an administrative law judge. It follows months of public review and negotiation called for by Insurance Commissioner Ricardo Lara under California’s voter-approved Proposition 103 rate hearing process.
Under the settlement, the previously approved interim rate of 38% for rental dwelling policies will be reduced to 32.8%, resulting in a rate refund for affected policyholders with 10% interest dating back to June 1, 2025.
Condominium policies rates will be reduced from 15% to 5.8%, which means policyholders will receive refunds and 10% interest back to June 1, 2025.
Renters insurance policies’ subline will see an increase to 15.65% from a currently approved interim rate of 15%.
Consumers whose rates were reduced will also receive refunds with 10% interest retroactive to June 1, 2025, according to the CDI.
State Farm reported massive losses from the Los Angeles Wildfires, prompting a pullback from writing in California. However, the carrier reported an underwriting gain of $1.5 billion for its property/casualty businesses in 2025, representing a turnaround from an underwriting loss of more than $6 billion in 2024—and more than $10 billion of underwriting losses in each of the two prior years.
Insurers have paid more than $22.4 billion on tens of thousands of claims from the Los Angles wildfires that broke out a year ago, according to the latest data from the California Department of Insurance.
In a report one year on from the L.A. wildfires in 2025, which started on Jan. 7, Morningstar DBS Research issued a perspective that called the fires “a significant stress event” for California’s property/casualty insurance sector.
Top photo: 2025 Pacific Palisades Fire. Source: CalFire.
Topics
California
Pricing Trends
Homeowners
State Farm
Interested in Homeowners?
Get automatic alerts for this topic.
