California homeowners brace for major insurance rate hikes
California homeowners brace for major insurance rate hikes | Insurance Business America
Insurance News
California homeowners brace for major insurance rate hikes
State Farm seeks 30% increase amid wildfire risks
Insurance News
By
Mav Rodriguez
Homeowners across California are facing the reality of rising insurance costs, with State Farm Insurance seeking approval for a substantial 30% increase in homeowners’ rates.
This follows a recent green light for Allstate to raise its rates by an average of 34%, leaving many residents concerned about the affordability of staying insured.
As the largest insurer in California, State Farm is not only seeking higher rates for homeowners but is also proposing a 52% increase for renters and a 36% hike for condominium owners. These requests come on the heels of a 20% rate increase approved last December—and the company has also identified several Bay Area ZIP codes where it will discontinue homeowners insurance coverage altogether.
Garrett Goo, a representative from a State Farm branch, told CBS News the impact of these hikes varies depending on the risk level of the area: “It’s not necessarily across the board. If you’re in a higher risk area, you may see a higher percentage.”
The reason for this increase? Climate change.
California has seen an average of over 7,000 wildfires annually in recent years, burning more than 2 million acres each year. The increasing severity of wildfires, attributed to the climate crisis, has resulted in significant financial losses for insurance companies, adding pressure to raise rates.
CBS News noted that state regulators are caught between the demands of insurers and the concerns of homeowners. While insurance companies argue that necessary rate increases are not being approved quickly enough, many residents feel the California Department of Insurance is not doing enough to protect them.
In the meantime, insurance experts recommend that homeowners shop around for more affordable coverage options.
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