State Farm Seeks 38% Rate Hike for California Renters Insurance

Insurer also plans to shed 600+ renters policies in high-fire-risk areas.

Evelyn Pimplaskar
Evelyn PimplaskarEditor-in-Chief, Director of Content
  • 10+ years in insurance and personal finance content

  • 30+ years in media, PR, and content creation

Evelyn leads Insurify’s content team. She’s passionate about creating empowering content to help people transform their financial lives and make sound insurance-buying decisions.

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Chris Schafer
Edited byChris Schafer
Chris Schafer
Chris SchaferSenior Editor
  • 15+ years in content creation

  • 7+ years in business and financial services content

Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.

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John Leach
Reviewed byJohn Leach
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John LeachSenior Insurance Copy Editor
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  • 8+ years editing experience

John leads Insurify’s copy desk, helping ensure the accuracy and readability of Insurify’s content. He’s a licensed agent specializing in home and car insurance topics.

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Published August 25, 2024 at 5:00 PM PDT | Reading time: 2 minutes

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Hundreds of California renters may soon have to find new insurance, while thousands more could face double-digit rate increases for their renters insurance.

In early August, State Farm — the state’s largest insurer — asked the California Department of Insurance to approve a 38% rate increase for the company’s California Rental Dwelling Program. The insurer also alerted the department of its intention to non-renew more than 600 rental policies for residents in areas with fire risks, according to a State Farm filing.

In its filing, State Farm cited high losses and continued risk from wildfires — and fires following an earthquake — as its impetus for shedding policies in high-risk areas and increasing rates for other renters policyholders.

“In an effort to address concerns regarding State Farm General Insurance Company’s financial health, we are revising our underwriting guidelines to manage our risk tolerance,” the company stated.

Impact on California tenants

The proposed rate increase would affect more than 260,000 State Farm renters insurance customers, according to the insurer’s filing. Average rates after the increase will vary by location.

Lookout, in Modoc County, will see the lowest rates after the increase, at an average of $91 per year. Tenants in Malibu will see the highest rates, with a post-increase average of $3,509 per year and the maximum cost soaring to $16,225 per year.

Tenants in areas at high risk of wildfires or post-earthquake fires will see their State Farm policies dropped altogether. State Farm’s filing said the insurer intended to begin sending non-renewal letters for 643 renters insurance policies with renewal dates of July 3, 2024, and later.

These policies insure properties in areas that “represent the most substantial wildfire hazard, fire following earthquake, or are in areas of significant concentration,” the filing stated.

State Farm’s struggles in California

Large losses from natural disasters like earthquakes, wildfires, and severe storms, as well as consumer-focused insurance laws, have made it difficult for insurance companies to be profitable in California, industry advocates say. Multiple insurers have either exited the state altogether, limited their business in California, or sought large rate increases.

State Farm is also seeking a 30% rate increase for homeowners policies and 36% for condo insurance. The company is the state’s largest residential property insurer, covering about 1.2 million homes. Earlier this year, State Farm announced it wouldn’t renew 30,000 homeowners policies and 42,000 landlord policies in California.

What’s next: Regulator review

California’s Department of Insurance is reviewing State Farm’s latest proposal and could take a few different actions in response. The department could approve the insurer’s proposed 38% increase, but it’s common for regulators and insurance companies to negotiate rate increases to levels acceptable to both.

As recently as Aug. 13, the department requested additional information from State Farm on its justification for the requested increases.

Evelyn Pimplaskar
Evelyn PimplaskarEditor-in-Chief, Director of Content

Evelyn Pimplaskar is Insurify’s director of content. With 30-plus years in content creation – including 10 years specializing in personal finance – Evelyn’s done everything from covering volatile local elections as a beat reporter to building fintech content libraries from the ground up.

Before joining Insurify, she was editor-in-chief at Credible, where she launched and developed the lending marketplace’s media partnership’s content initiative and managed the restructuring of the editorial team to enhance content production efficiency. Formerly, as tax editor for Credit Karma, Evelyn built a library of more than 300 educational articles on federal and state taxes, achieving triple-digit year-over-year growth in e-files from organic search.

Her early career included work as a content marketer, vice president and managing officer of a boutique public relations agency, chief copy editor for 14 weekly Forbes publications, reporting for large and mid-sized daily newspapers, and freelancing for the Associated Press.

Evelyn is passionate about creating personal finance content that distills complex topics into relatable, easy-to-understand stories. She believes great content helps empower readers with the information they need to make important personal finance decisions.

Chris Schafer
Edited byChris SchaferSenior Editor
Chris Schafer
Chris SchaferSenior Editor
  • 15+ years in content creation

  • 7+ years in business and financial services content

Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.

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John Leach
Reviewed byJohn LeachSenior Insurance Copy Editor
Photo of an Insurify author
John LeachSenior Insurance Copy Editor
  • Licensed property and casualty insurance agent

  • 8+ years editing experience

John leads Insurify’s copy desk, helping ensure the accuracy and readability of Insurify’s content. He’s a licensed agent specializing in home and car insurance topics.

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