(HorizonPost.com) – State Farm Insurance has asked California officials to permit it to increase insurance rates by as much as 50 percent, just four months after announcing that it was discontinuing homeowner policies for more than 72,000 residents.
The state’s largest insurer asked the California Department of Insurance for permission to raise homeowner insurance rates by 30 percent, condo rates by 36 percent, and rental insurance by 52 percent.
State Farm explained that the rate increases were prompted by the increased risk and costs necessary to ensure that the insurer could continue to “deliver on the promises” it has made to its customers.
While the soaring costs and increased risks of wildfires are behind the latest rate increase, it is also possible that State Farm could be trying to push the state to keep up with inflation, according to consumer advocate Joel Laucher.
Laucher, from the non-profit group United Policyholder, said insurers in the state claim that the Department of Insurance is not raising rates fast enough.
Homeowners with other insurance companies have also seen a marked increase in their rates in recent months.
Last year, State Farm announced that it would stop accepting insurance applications for all California business and personal lines of property and casualty insurance due to the state’s reinsurance market, inflation, and increased risk.
California’s insurance commissioner has sought to overhaul the state’s home insurance regulations in an attempt to calm the market and provide insurers more flexibility in raising premiums.
The requested rate increases State Farm seeks will still need to be approved by the Department of Insurance, a process that could take several months.
For California homeowners, consumer advocates recommend that they either try to work with their insurers to find ways to save money or shop around for another company if their rates become too high.
The volatile insurance market in the state has prompted some California homeowners to go without insurance coverage at all. California does offer a state-run pool that acts as an insurer as a last resort.
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