A new filing in the state of Illinois says that homeowners’ insurance rates could go up by a lot soon.
State Farm said it was going to raise rates by a lot because of what it called an increase in disaster weather.
“Over the last several years, our catastrophe provision has proven to be inadequate when compared to our actual catastrophe loss experience,” State Farm said in its filing. “While there is volatility associated with extreme weather events, our Illinois catastrophe losses have exceeded the year’s catastrophe provision in 13 of the last 15 years, signaling the provision used in rating has been insufficient in recent history.”
The report shows that the change would mean a 27.2% rise. The average change in homeowner’s insurance rates across the state would be 28.3%, when other changes are taken into account. The Chicago Tribune says that is one of the biggest jumps in any state’s history.
The changes start for new customers on July 15 and for plans that are being renewed on August 15.
“Home insurance rates are on the rise in Illinois due to rising home replacement costs and more frequent severe weather events that are driving up the cost and frequency of claims,” State Farm said in a warning on its site. “These changes reflect broader trends in loss patterns and repair costs and are necessary to help ensure we can continue providing reliable coverage to our policyholders.”
What the Illinois Department of Insurance said in response to the filing was that the changes would have a “large expected impact on consumers.”
The insurance company based in Bloomington said that in 2024, State Farm paid out $1.26 for every $1 that customers in Illinois got. When it hit $1.30 in 2023, the company said the rate of loss was “unsustainable.”
It’s more expensive than the premiums we’re getting to cover Illinois homes’ losses, which means we need to change our prices, the company said in a statement, adding that inflation has also played a part.
With $638 million in claims in 2024, Illinois was one of the top 10 states in the U.S. for hail damage caused by bad weather. Only Texas had more claims, with $1.1 billion.
The company said that Illinois prices are based on risks “for this state—not for losses in other states, such as hurricanes, wildfires, or earthquakes.”
State Farm says it is also adding a new “Wind/Hail Deductible” to “help keep premiums from going up too much.”
Customers in Illinois will have to have a Wind/Hail deductible of at least 1% as part of their insurance. This deductible will apply when losses were caused by wind or hail.
“Choosing a higher deductible is one way to reduce the premium you pay for insurance,” the firm said.
The price hike is one of many that Illinois’s biggest insurance companies have revealed.
As noted by the Tribune, Allstate Insurance, which is also based in Illinois, raised its home insurance rates by 14.3% in Illinois in February.
Allstate and State Farm both raised car insurance rates across the state last year.
