SAN DIEGO — State Farm is asking the California Department of Insurance for another rate hike, this on top of a 20 percent rate increase approved last year. The company wants to hike rates 30 percent on California homeowners, 36 percent on condo owners, and 52 percent on renters insurance.
None of these rate increases are a done deal yet. They still have to be approved by the California Department of Insurance, a process that could trigger hearings and stretch on for months.
“It's critical to understand that nothing changes today for State Farm policy holders,” said Michael Soller, a spokesperson for California Department of Insurance.
“The rate filing that state farm just made, they're triggering a rarely-used part of the insurance law. It's a regulation that's really meant to address a company's financial solvency. That's what they're saying. And we're going to look closely at that. We have some serious questions about State Farm's financial condition, and we're going to get to the bottom of it,” said Soller.
State Farm has already stopped writing new homeowners policies in California. Earlier this year, the company announced it would not renew 30,000 homeowners’ policies statewide.
A State Farm spokesperson emailed CBS 8 the following statement:
“State Farm General Insurance Company (“State Farm General”) is working toward its long-term sustainability in California. Rate changes are driven by increased costs and risk and are necessary for State Farm General to deliver on the promises the Company makes every day to its customers. We continue to look for ways to maintain competitive rates and help our customers manage their risk. Rate filings are not final until approved by the California Department of Insurance. Customers with questions are encouraged to speak with their local State Farm agent. The agent can review the customer's policy, including deductibles and coverages. This conversation is also a great opportunity to make sure the customer is taking advantage of all discounts available to them.”
Karl Susman, an independent insurance broker and industry experts, said State Farm policy holders "do not really have any options right now."
He agrees, one possibility for customers is to call their agents and ask questions about reducing coverage. “Start out with the question, say, ‘What is the maximum deductible that you offer?’ If that doesn't help enough to be worthwhile, move on to something else. Maybe it's the coverage for personal property. Maybe it's the coverage for loss of use. Sometimes people have coverage that come with these policies that they don't need,” said Susman.
The good news is, by the end of the year, California is expected to adopt a series of insurance reforms that could encourage more insurance companies to start offering policies again in the state.
“State Farm consumers might see large rate increases coming, but by the time they actually reach them, they will have other options and other carriers that might have significantly lower premiums to go to,” said Susman.
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