Settlement with state regulators includes partial refunds and extended non-renewal moratorium
It’s sort of Pa-insurance. Don’t you agree Southern Californians?
State Farm will maintain a 17% increase in homeowners’ insurance premiums in California under a new agreement reached with state regulators and a consumer advocacy group, officials announced.
The California Department of Insurance (CDI), consumer group Consumer Watchdog, and State Farm recently reached a three-party settlement related to the insurer’s emergency interim rate increase request. The agreement is part of an ongoing formal rate-review process and will be finalized after review by an administrative law judge.
According to the Insurance Department, the settlement aims to provide premium reductions and refunds for some policyholders while ensuring continued coverage during the stabilization of California’s insurance market.
The process follows months of document submissions, hearings and negotiations conducted under Proposition 103, the voter-approved law that requires public review of insurance rate increases.
Under the agreement, the previously approved emergency rate increases will be partially revised.
The 17% increase for homeowners’ insurance will remain unchanged, with no additional increase beyond that level.
For rental property insurance, the previously approved 38% rate increase will be reduced to 32.8%. The change will be applied retroactively to June 1, 2025, and customers will receive refunds that include 10% annual interest.
For condominium insurance, the rate increase will be reduced significantly from 15% to 5.8%, also applied retroactively to June 1, 2025, with refunds including interest.
However, renters insurance will rise slightly, from 15.0% to 15.65%, under the revised agreement.
Policyholders eligible for reductions will receive refunds covering any excess premiums paid since June 1, 2025, along with interest.
The settlement also includes an extension of the moratorium on policy non-renewals and cancellations for homeowners, rental property, condominium and renters insurance policies for at least one additional year. State regulators say the measure is intended to prevent coverage gaps as California’s insurance market continues to recover following recent wildfire losses.
Officials said that once required supplemental documents are submitted by March 20, an administrative law judge is expected to issue a recommendation by April 7. The final decision will then be made by the California insurance commissioner.
Consumer Watchdog may also request intervenor compensation under Proposition 103, which, if approved, would be paid by State Farm policyholders.
Separately, the California Department of Insurance said it is conducting a market conduct investigation into State Farm’s claims handling practices and regulatory compliance, with findings expected later this spring.
