State Farm, California, and Consumer Advocates Reach Agreement on 2025 Emergency Rate Hike | Insurify

California's largest home insurance provider can keep a 17% emergency rate increase it implemented last year in the wake of the Los Angeles County wildfires, under an agreement reached among the insurer, state regulators, and a consumer advocacy group.

But State Farm, which commands about 10% of California's property insurance market, will have to partially refund premiums it charged rental dwelling (landlord) and condo insurance customers under a previously approved interim rate increase.

The agreement by the insurer, the California Department of Insurance (CDI), and Consumer Watchdog, reduces the approved landlord and condo increases to 32.8% and 5.8%, respectively. State Farm had requested a 38% increase for rental dwelling policies and 15% for condominium policies, according to an insurance department press release.

Tenants who have renters insurance policies with State Farm, however, will see a slightly higher rate than the previously approved interim rate. Their rates will rise by 15.65% under the agreement, up from a 15% increase the insurer implemented last year.

Refunds for some State Farm policyholders

Landlords and condo owners will see the biggest benefit from the agreement, as some will be eligible for premium refunds and interest. Rate refunds plus 10% interest will be retroactive to June 1, 2025, according to the CDI.

Renters and homeowners, however, aren't eligible for refunds since the final approved rates match or exceed the interim rates State Farm operated under since June 1 of last year.

Extension of non-renewal moratorium

As part of the settlement, State Farm agreed it won't make any block non-renewals for the rest of 2026 among the policy lines that are part of the agreement. Block non-renewals are when insurers decide to shed certain groups of policyholders or lines of business by issuing non-renewal notices to individual policyholders.

The insurer also agreed to preserve certain policies it had originally slated for non-renewal in a March 2024 filing with state regulators. Among the protected properties are any with claims from the Palisades and Eaton fires that occurred in January 2025.

What's next? State Farm's California business going forward

State Farm requested the emergency increases about one month after the L.A. County wildfires burned more than 37,000 acres, including buildings in rural and urban areas. The fires caused $28 billion to $53.8 billion in property damage.

In its Feb. 3, 2025, letter to California Insurance Commissioner Ricardo Lara, State Farm said it had already received more than 8,700 claims related to the January 2025 fires. At that point, the company had already paid out more than $1 billion for those claims. The insurer said it needed the emergency rate increases to maintain its ability to pay claims in California.

The agreement also sets a deadline of June 1, 2027, for the insurer to submit any new rate change filings for the affected lines of business. Although State Farm is free to file rate change requests sooner, the insurer stipulated in the agreement that it doesn't plan to request any changes before Jan. 1, 2027.