Effective August 2025, State Farm will implement a significant rate increase for Illinois homeowners, raising home insurance premiums by an average of 27%. The company confirmed the change in an email to CBS News Chicago and cited financial strain as the driving factor.
According to State Farm, the decision to raise rates stems from the insurer paying out more in claims than it receives in premiums. In 2024, the company reported that for every dollar collected from homeowners, it paid out $1.26 in total costs. The insurer attributed this imbalance in part to rising inflation and an uptick in severe weather events. Notably, Illinois recorded the second-highest number of hail damage claims in the country, behind only Texas.
Auto Insurance Rates to Drop
While home insurance premiums are set to rise, State Farm announced a decrease in auto insurance rates for Illinois customers. The company stated that auto premiums will drop by an average of 5.7%, with some policyholders seeing reductions as high as 15%.
State Response
Illinois Governor JB Pritzker issued a statement expressing concern over the rate hike. He described the increase as “unfair and arbitrary,” alleging that the justification—catastrophe losses—contradicts the analysis of the Illinois Department of Insurance. The governor suggested that the insurer may be shifting out-of-state costs onto Illinois policyholders.
In addition to higher premiums, Governor Pritzker noted that State Farm also plans to increase out-of-pocket deductibles and reduce certain claim payouts. He stated that these combined changes would result in Illinois homeowners paying hundreds more annually without what he described as a state-based justification or additional coverage.
The governor announced he has directed the Illinois Department of Insurance to pursue all available regulatory actions and urged the General Assembly to consider legislation during the upcoming veto session aimed at preventing what he called “severe and unnecessary rate hikes.”
Next Steps
As of now, the rate changes are scheduled to take effect in August. The Illinois Department of Insurance has not released an independent statement in response. State Farm has not issued additional comments beyond those originally shared.