Homes in Orinda, Calif., one of the parts of the Bay Area that has been hit hardest by the home insurance crisis. (Yalonda M. James/The Chronicle)
Farmers Insurance Group, the second largest home insurer in California, is set to raise overall policy rates for homeowners by 1.5% this fall.
Its rate hike, approved Monday, will take effect for the insurers’ nearly 915,000 homeowners at their next renewal date following Sept. 15, 2026, according to a filing with the California Department of Insurance. While increases across the state will average out to 1.5%, Individual customers could see their rates rise by much more than 1.5% or may see their premiums decrease. Data on the exact range of rate changes or which areas may see the largest hikes wasn’t available on Monday.
Farmers covers approximately 11% of all insured homes in California, second only to State Farm General. As part of its filing, the insurer said it will up its home and auto bundling discount from 15% to 22% and increase the discounts homeowners can get for reducing their wildfire risk.
This is Farmers’ first filing under the Sustainable Insurance Strategy, a set of regulatory reforms finalized last year that altered the way insurance companies price wildfire risk. The request was first submitted last November for a 6.99% increase but was approved by regulators at just 1.5%.
The reforms will now require Farmers to write a minimum of 5,596 new policies over the next two years in designated “distressed” areas – parts of the state the Department of Insurance has singled out for having high wildfire risk and a large share of homeowners on the California FAIR Plan, the state insurer of last resort.
In 2023, Farmers began capping the number of new policies it wrote in California each month. It also stopped writing new condominium and rental home policies altogether. Last year, after the Sustainable Insurance Strategy reforms were implemented, it eliminated its cap and reopened to all lines of business.
“We continue to see encouraging signs that the California insurance marketplace is strengthening and we want to be well-positioned to grow and provide improved coverage offerings to California consumers,” Behram Dinshaw, Farmers’ president of personal lines insurance, said in a statement. “Farmers is proud to be one of the few home insurers that never stopped offering new home policies in the state and we remain committed to the California marketplace.”
Other rate hikes approved under the Sustainable Insurance Strategy include 6.9% increases for Mercury Insurance, USAA, Pacific Specialty Insurance Co., California Casualty Insurance and CSAA, the AAA-affiliated insurer for Northern California.