Illinois Homeowners Face Near-Record Insurance Rate Hike

Home insurance in Illinois is about to get much more expensive for about 1.5 million State Farm customers. The insurer is raising its property insurance rates by 27%, effective Aug. 15 for existing customers and July 15 for new customers.

The increase is one of the largest recorded in state history.

State Farm filed the rate increase with the state’s Department of Insurance in June, citing extreme losses related to severe weather events in the state. In Illinois, insurance companies can file paperwork for a rate increase and implement the increases without state approval.

The insurer is also requiring policyholders to carry at least a 1% wind/hail deductible. That means a homeowner with $500,000 in coverage would need to pay $5,000 out of pocket before their policy would pay for hail or wind damage.

Insurer points to high losses from hail and wind

In its filing, State Farm stated that Illinois suffers more hail damage than any other state besides Texas.

“Over the last several years, our catastrophe provision has proven to be inadequate when compared to our actual catastrophe loss experience,” State Farm wrote in the filing. “While there is volatility associated with extreme weather events, our Illinois catastrophe losses have exceeded the year’s catastrophe provision in 13 of the last 15 years, signaling the provision used in rating has been insufficient in recent history.”

State Farm’s filing “raised serious questions as to whether their specific rate increases were based solely on Illinois experience,” the Illinois Department of Insurance said. The department is requesting more information from the company to justify the increase.

Illinois Gov. J.B. Pritzker echoed similar concerns. Illinois policyholders should not be paying increased rates to “protect beach houses in Florida,” Pritzker told the Insurance Journal.

State Farm has called such allegations “factually incorrect.”

Impact on State Farm policyholders in Illinois

The overall 27% rate increase will translate to an average hike of 28% for homeowners, nearly 14% for renters, and 11% for condominium and unit owners. It will also require the 1% wind and hail deductible for all policy renewals.

Pritzker challenged State Farm’s rate filing as “unfair and arbitrary.” And while insurance regulators have asked for more justification, there may be little they can currently do to block the rate increase.

The department told the Chicago Tribune that current insurance laws don’t give it the authority to approve or reject rate changes.

Other Illinois insurers raising rates as well

State Farm isn’t the only insurer raising rates in Illinois. Allstate raised its home insurance rates by 14% in February, affecting roughly 248,000 policyholders. 

Allstate had also previously raised its rates by nearly 13% in 2024. State Farm increased rates by 12% last year.

State Farm reports it paid out $1.26 for every $1 collected in 2024.

What’s next? Rates are still higher in other parts of the country

Despite aggressive rate hikes from some of the state’s largest insurers, Illinois’ average home insurance rate sits at $3,402 per year, according to Insurify data. This is slightly below the national average of $3,520.

Residents of Florida and Louisiana pay the highest annual home insurance rates in the nation, at $15,460 and $13,937, respectively.

Illinois also pays a lower average rate than border states Iowa ($3,825) and Missouri ($3,641), but rates are higher in Illinois than in Wisconsin ($2,050) and Indiana ($2,766).

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