The Los Angeles Times has reported that State Farm General is pursuing a substantial 39% rate hike for its Personal Liability Umbrella policies in California, according to a filing with the California Department of Insurance. The request follows a series of recent increases and comes amid significant financial pressures related to recent catastrophic wildfires.
The umbrella policy, offered as an add-on to existing homeowners and auto policies, provides extended liability protection for incidents such as serious auto accidents, property damage, injuries like slip-and-falls, and even claims of libel or slander.
If approved, the new rate would go into effect on August 1, 2025. It follows a 29% increase that took effect March 1, as well as two previous hikes in 2024 — one for 15% and another for 40%. Prior to those adjustments, the last increase to the umbrella policy had been in 2020.
Rising Costs and Claims Cited as Reasons
State Farm attributed its rate hike request to an increase in personal liability costs across the insurance industry, citing more frequent accidents, escalating medical bills, and larger legal settlements. The company also noted a higher volume of claims overall.
This request comes as the company is also seeking an emergency 22% rate increase for homeowners coverage, tied to the devastating wildfires that struck Los Angeles County on January 7, 2025 — including incidents in Pacific Palisades and Altadena. State Farm General reported it has paid nearly $2.5 billion on more than 10,000 fire claims, with total expected payouts reaching approximately $7.6 billion. After reinsurance reimbursements, net losses are projected at about $600 million.
State Oversight and Public Hearing
California Insurance Commissioner Ricardo Lara provisionally approved the 22% homeowners rate hike in March, but also scheduled a public hearing for April 8 before an administrative law judge. The judge will issue a proposed decision, which Lara may accept, reject, or modify.
Commissioner Lara has also requested that State Farm halt its policy nonrenewals across the state, and has urged the insurer’s parent company to provide $500 million in capital to help stabilize its financial position.
Industry-Wide Cost Increases
While declining to comment specifically on State Farm’s umbrella rate filing, Janet Ruiz, spokesperson for the Insurance Information Institute, noted that umbrella liability costs have risen industry-wide. These policies typically cost a few hundred dollars annually for $1–$2 million in coverage, but increases in medical expenses, severe auto accidents, and social media-related libel and slander claims have driven up losses for insurers.
“When all those things are rising then we have to pay those losses,” Ruiz said.