Looming State Farm Insurance rate hikes have Bay Area homeowners on edge
Condo, renter, and home insurance rates are skyrocketing for many customers across the Bay Area and California, with more increases looming.
State Farm Insurance is asking for another 30% hike for homeowners and waiting for state regulators to approve the request. Allstate Insurance just got the green light to raise its home insurance rates by an average of 34%.
Glen Starkey still puts in the work to minimize any risks that home insurance companies may frown upon.
"I play ball with them," said Starkey.
He's never submitted a claim for any of his properties in his lifetime. His rates with State Farm have remained steady, with minimal increases along the way.
"I won't suffer like some of the other people who have been dropped and don't have the income," said Starkey.
Starkey is in a low fire risk neighborhood in San Rafael. But other homeowners living farther north in parts of Santa Rosa feel they're being burned.
"Because of the fires around here, they say my home is in the fire zone. So they added $1,200 to it. So now instead of $900 a month it's $2,100. How do I pay that?" said a homeowner who asked not to be identified.
State Farm Insurance, California's largest, is requesting a 30% rate increase for its homeowners line, a 52% rate increase for renters and a 36% rate increase for condominium owners.
Last April, State Farm disclosed state zip codes where it will discontinue homeowners insurance coverage, with Bay Area counties topping the list.
State regulators previously approved for a 20% hike for homeowners' and condominium owners' policies last December.
Garrett Goo works for a State Farm Insurance branch. He explained how previous hikes have impacted clients differently.
"It's not necessarily across the board. If you're in a higher risk area you may see a higher percentage," said Goo.
Frustrated residents say needed home improvement projects may be put on hold if rates increase again. Many argue it's insurance greed driving the rate hikes, but did not want to speak on-camera, fearing they'll be dropped by bringing more attention to their insurance policies.
"The main problem is that homeowners insurance has not been profitable for sometime in California," said David Russell.
Russell is a professor of Insurance and Finance at Cal State University Northridge. He says rising labor and material costs, and other factors are to blame.
"Because inflation and climate change is driving loss costs higher, the insurance industry is chasing a higher number," said Russell.
California has seen an average of more than 7,000 wildfires each year, consuming an average of over 2 million acres, over the past several years, according to data from the governor's office.
Scientists and California authorities blame the climate crisis for the intensity of the fire seasons. Massive losses and claims from catastrophic wildfires have taken a toll on the bottom line for insurance companies.
They say state regulators are not approving needed rate hikes quickly enough, forcing them to stop writing policies. But homeowners say the California Department of Insurance isn't standing up for them.
"The insurance commissioner Lara is trying to balance the interests of insurers to maintain availability in the marketplace while also trying to avoid, though it may be unavoidable, rate shock for consumers," said Russell.
Dozens of homeowners CBS News Bay Area spoke to expressed varying levels of frustration, while some say they understand the situation.
"A lot of families are not as lucky as I am," said Starkey.
The fear of rate hikes has made Glen Starkey ultra careful to maintain his properties and minimize any risks. It's the only thing he can control in this new insurance marketplace.
Insurance experts say customers should shop around for better rates if they're facing significant increases.
