Lara described the not-yet-final emergency rate increase as a necessary measure given "unprecedented times" in a statement, saying the insurance company will have to justify the rate hike with data proving it's needed at a public hearing on April 8. During a Feb. 26 meeting at the Department of Insurance's Oakland office, State Farm told the commissioner it would be able to cover thousands of claims from the deadly wildfires in January which damaged and destroyed thousands of homes and other structures — but would need to raise homeowners' rates to cover the costs.
State Farm General, the company's California-only subsidiary, has said that rate hikes are needed to pay out future claims as it expects to cover an estimated $7.6 billion in LA wildfire losses. The company has said paying out the claims has already depleted its capital so far, so it requested approval to raise rates by 22% for homeowners and 15% for renters.
Some Los Angeles County residents who lost homes in the Palisades and Eaton Fires have reported not having enough coverage to cover the destruction and rebuild while others had their coverage dropped before the disasters. In the Pacific Palisades, 1,600 policies were dropped by State Farm in July, and an analysis by CBS News San Francisco last year found that State Farm also dropped more than 2,000 policies in other parts of LA including another neighborhood threatened by the Palisades Fire.
Two homes remain after a fire destroyed the neighborhood during the 2025 Eaton Fire. Shot with a drone from above. Getty ImagesThe FAIR Plan offers basic fire insurance, providing coverage for homes in high-risk areas when private insurers will not.
"Many are already anxious about losing their coverage and being forced onto the Fair Plan," Lara said at the meeting. "And in terms of what certainty can consumers expect from State Farm if granted an interim rate, I do appreciate State Farm was the first insurer to voluntarily suspend pending non-renewals and cancellations in areas affected by the Palisades and Eaton fires."
"This approval would be provisional and will require State Farm to issue full refunds with interest if it fails to substantiate the validity of this rate," Lara told State Farm at the meeting, requiring the company to meet certain condition to keep the price increase.
The week, the insurance commissioner also called on State Farm to halt non-renewals and try to obtain a $500 million capital infusion from its parent company to address its financial struggles.
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