State Farm has sparked fierce backlash by hiking home insurance rates in Illinois by 27.2 percent, adding $746 to the average bill.
The insurer insists the hike is unavoidable, claiming it’s paying out far more in claims than it collects in premiums in the state.
For every $1 collected in the state in 2024, the company says it paid out $1.26. The year before, the sum it paid out was even higher, at $1.30.
Hail damage is the main culprit, the company said, with Illinois trailing only Texas for the number of hail-related claims last year.
Rising labor and material costs have also driven up repair expenses.
But lawmakers have blasted the price hikes, which could hit policyholders as soon as August 15.
Illinois Governor JB Pritzker called the increases ‘unfair and arbitrary’, promising to work to deliver more protections for homeowners in the face of soaring costs.
Illinois is one of the few states where insurers can raise rates without approval from regulators.
State Farm has sparked fierce backlash by hiking insurance rates in Illinois by 27.2 percent (Pictured: Lightning strikes the Chicago skyline during a heavy storm)
The state has no meaningful rate review process for homeowners insurance, Realtor.com reported.
This means that once a company files new rates with the Department of Insurance, that is typically the end of the story.
State Farm already raised rates 12.3 percent in 2024 — and it is not alone.
Allstate also hiked prices for policyholders in Illinois by 14.3 percent earlier this year, and 12.7 percent in 2024.
With the latest increase, Democratic Governor Pritzker accused State Farm of raising costs in the state to subsidize losses elsewhere in the US.
‘Hardworking Illinoisans should not be paying more to protect beach houses in Florida,’ he said.
Illinois House Speaker Emanuel Chris Welch also called the hike ‘wrong.’
But other lawmakers have questioned whether regulation to protect consumers from rising costs could end up driving insurers out of the market.
Lt. John Andrews shows the damaged caused by hail on a new police car in Chicago in 2011
Hail damage to the roof of the historic Fern Room at the Garfield Park Conservatory in Chicago
Illinois Governor JB Pritzker called the increases ‘unfair and arbitrary’, promising to work to deliver more protections for homeowners in the face of soaring costs
Republican State Representative Jeff Keicher, who is also a longtime State Farm agent, used California as an example, saying that regulatory constraints have led insurers to flee the state.
‘The worst thing we can do is force insurers to underprice and go out of business,’ Keicher told The Chicago Tribune, ‘and leave homeowners without a way to get their home fixed if the worst happens.’
Several large insurers, including State Farm, have cut back or limited their coverage in California amid worsening climate disasters, leaving many people struggling to find home cover.
Over half of Californians said in 2024 that they had been affected by rising premiums for property coverage or had been dropped by their insurer entirely.
In the wake of State Farm’s proposal for Illinois, lawmakers are fast-tracking a series of proposals designed to give consumers more protection.
Last year, Pritzker signed legislation requiring rate review for large group health insurance, allowing the state to block excessive increases, Realtor.com reported.
Now some lawmakers want to apply that same framework to home insurance policies where companies must justify hikes with years of data.
Increases will then be rejected if they are deemed ‘excessive, inadequate, or unfairly discriminatory.’
Instead of regulation, the insurance industry itself is pushing for measures to make properties more resilient against future natural disasters, including more comprehensive home construction standards.
