State Farm Insurance, a major insurance company in Illinois, is set to raise its home insurance rates in the state by a significant 27.2%, starting from August 15th. This marks the largest rate increase in the state’s history and will impact nearly 1.5 million policyholders. From July 15th onwards, new policyholders will be subject to these higher rates.
According to a document filed by State Farm with the Illinois government last month, the rate hike is attributed to catastrophic losses caused by extreme weather events in the state. The document states, “In 13 out of the past 15 years, catastrophic losses in Illinois have exceeded the disaster reserves for that year, indicating that the reserves used in recent rating were insufficient.”
In 2024, State Farm had previously increased homeowner insurance rates in Illinois by 12.3%. The company also recently announced on its website that it has received nearly 13,000 claims from homeowners in California and has paid out over $4.2 billion to cover their losses from the wildfires that ravaged the Los Angeles area in January.
While State Farm is raising home insurance rates in Illinois and seeking approval for rate increases in specific states like California, it does not necessarily mean that rates will increase across all states in the country as such adjustments require approval from state regulatory agencies.
A report released by LendingTree in June titled “Home Insurance Conditions Report” revealed that over the past six years, home insurance costs have been soaring across the United States, with an average rate increase of 40.4%. States with the highest cumulative rate increases include Colorado, Nebraska, Utah, Arizona, and Minnesota.
In 2024, Montana and Nebraska had the highest nationwide increases in home insurance rates at 22.1%, followed by Washington at 19.5%. Meanwhile, some states that were most impacted by the national home insurance crisis reported the smallest increases. Florida saw a rate increase of only 1.7% in 2024, while Texas experienced a 3.4% increase. This trend may be attributed to insurance companies already raising rates significantly or withdrawing from high-risk areas in these two states to avoid further costs.
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