LOS ANGELES, May 13, 2025 -- A proposed decision recommending approval of State Farm General's request for an interim rate hike was issued by an Administrative Law Judge yesterday and sent to Insurance Commissioner Ricardo Lara. If approved by Lara, the settlement would impose a 17% rate increase for homeowners, 15% increase for renters and condo owners, and a 38% increase for rental dwelling policies as soon as June 1.
"Today's decision that would make consumers pay now but allow State Farm to wait months before having to show its math is a great disappointment for consumers. Voter-approved Proposition 103 says a rate hike shouldn't come before the rate justification, but that's what happened here. We urge the Commissioner to reject the proposed decision so State Farm policyholders, many of whom are struggling to get their claims paid by the company after the Los Angeles fires, aren't overcharged," said Carmen Balber, executive director of Consumer Watchdog.
Recent serious allegations have emerged regarding State Farm's mishandling of fire claims following the Eaton and Palisades fires in Los Angeles. Numerous policyholders have reported delays, denials, rotating adjusters, and inadequate assessments of damage, leading to financial hardship and widespread criticism of the insurer's claim handling practices. "It adds insult to injury for consumers to be forced to pay significantly more for coverage when some of these same consumers may be simultaneously trying to recover from the fires while State Farm is mishandling their existing claims," said Balber.
Under the proposed decision, State Farm's rate hike will be subject to review in a full rate hearing, where the company will be required to fully justify the rate. That hearing is now tentatively scheduled for October.
The agreement also promises refunds if the rate is ultimately proved to be excessive. "Refunds will be too little too late for homeowners who are already struggling to pay their home insurance premiums," said Balber. "Nevertheless, we will fully defend consumers' right to fair rates in the upcoming hearings where State Farm will finally have to justify what they want to charge."
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