The rate hikes will raise rates for apartment and rental landlords 38%
Following LA Fires, Apartment Owners Will Take Brunt Of State Farm’s Rate Hike
Following January’s historic fires in and around LA, the state’s insurance commissioner Tuesday granted State Farm’s request for rate hikes that will affect apartment owners as well as condo and homeowners.
The rate hikes will raise rates for apartment and rental landlords 38%, condo owners 15% and homeowners 17%, the Los Angeles Times reported.
The increase also requires that State Farm receive “an immediate $400 million cash infusion from its parent company to address its serious financial condition,” according to a statement from the California Department of Insurance. State Farm is California’s biggest home insurer.
California Insurance Commissioner Ricardo Lara’s decision to accept the interim increases came after a ruling from an administrative law judge recommending that Lara do so while his department considers State Farm’s 2024 request for even greater increases. That request included an increase of 30% for homeowners, 42% for condo owners and renters, and 38% for apartment owners and rental landlords, the LA Times reported at the time.
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“The proposed interim rate stipulation serves the best interests of California consumers and the public,” Judge Karl Frederic Seligman wrote in his Tuesday ruling.
“Taken as a whole, it represents a fundamentally fair, adequate and necessary measure — effectively functioning as a rescue mission to stabilize State Farm’s financial condition while safeguarding policyholders,” Seligman added.
The ruling comes as State Farm policyholders have been vocal about their dissatisfaction with the insurer’s handling of their cases following the massive Eaton fires. A group of residents has called on Lara to investigate the company for its delays and denials of coverage, the LA Times reported in April.
“I expect State Farm to provide the highest level of service to its California customers and to fulfill its promises,” Lara said in a statement.
“State Farm must now justify its financial condition and detail its recovery plan in a full rate hearing before a neutral judge and my department’s experts,” Lara said.
The emergency rate increase takes effect June 1, according to the insurance department release. A date for the full rate hearing is not yet set.
Source: Bisnow
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