State Farm to issue $5 billion in auto insurance dividends — or about $100 per car

Home insurance rates may be going through the roof, but State Farm has some good news for its auto insurance customers. 

State Farm will issue $5 billion in auto insurance dividends to its customers this summer, with a one-time payment of about $100 per vehicle, the Bloomington-based insurance giant announced Thursday.  

The largest dividend in State Farm’s 103-year history was driven primarily by lower collision repair costs in 2025, the company said. 

The distributions cover more than 49 million vehicles insured by State Farm across the country, with the actual amount varying by state and premiums paid. State Farm did not project the average size of the checks Illinois customers can expect, but a spokesperson said there will be more information as the payout date gets closer. 

“As a mutual company with a customer-first focus, State Farm Mutual is able to provide value directly to our customers while maintaining financial strength to keep our promises in the future,” Jon Farney, State Farm Mutual President and CEO, said in a news release. “That translated this year to lower auto rates and cash back in the form of a $5 billion policyholder dividend.”

State Farm said the dividend was enabled by “a stronger than expected underwriting performance” last year, according to the news release. 

The company also touted lowering auto insurance rates in 40 states in recent months by an average of 10%, amounting to a premium savings of $4.6 billion. Lower premiums were made possible by decreasing repair costs and fewer collisions in 2025, the company said.

In Illinois, State Farm’s auto insurance rates decreased by 15% last year, a company spokesperson told the Tribune.

But keeping the lid on home insurance rates continues to be a nationwide challenge for State Farm, the company said Thursday. 

“As good as the story is on auto insurance, the story on homeowners insurance is a little bit different,” Chris Schell, State Farm’s Chief Operating Officer, said during a media briefing. “The combined dynamics of increasing frequency and severity of storms, particularly severe convective storms, has pushed the rising cost to repair and rebuild and the cost of reinsurance up significantly, and so we’ve had to react to that.” 

Last year, State Farm paid $15 billion in claims to customers who suffered catastrophic losses, including about $5 billion to homeowners impacted by the devastating Southern California wildfires in January 2025, Schell said. By the time rebuilding is complete, State Farm expects the total will reach $7 billion across 13,000 claims. 

Illinois was not immune to weather-driven homeowners insurance issues.  

In July, State Farm raised homeowners insurance rates by 27.2% – one of the largest increases in the state’s history – affecting nearly 1.5 million policyholders across Illinois. 

The company pointed to more frequent extreme weather events such as wind, hail and tornados contributing to underwriting losses in Illinois. State Farm also implemented a minimum 1% deductible on all wind and hail losses, raising the out-of-pocket costs for homeowners filing a related damage claim. 

The move created a firestorm in Illinois, with everyone from consumer groups to Gov. JB Pritzker challenging the hefty rate increase. But Illinois lawmakers failed to pass legislation last fall that would have empowered the Illinois Department of Insurance to reject excessive homeowners insurance rate hikes. The legislation was opposed by the insurance industry, including State Farm.

While it may not offset higher homeowner premiums, at least Illinois customers that bundle home and auto can expect a $100 check back from State Farm this summer for each car insured.   

rchannick@chicagotribune.com

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