Illinois Homeowners to Face 27% Insurance Rate Hike from State Farm

State Farm will hike home insurance rates in Illinois by 27%, adding $746 to the average policyholder's annual premium, effective Aug. 15. The insurance giant blames the increase in costs on rising material and labor costs, an uptick in damaging storms, and higher claims costs exceeding premiums collected. Illinois Gov. JB Pritzker criticized the move, saying it is "unfair and arbitrary." Millions of U.S. owner-occupied homes are uninsured, putting them at risk in the event of a disaster.

State Farm, one of the largest insurance companies in the United States, has announced a significant increase in home insurance rates for Illinois residents. Effective August 15, the average policyholder's annual premium will rise by more than 27%, adding approximately $746 to their annual costs. This increase comes amidst broader concerns about housing affordability and a growing number of uninsured homes across the country.

The hike is part of a broader trend in the insurance industry, with many companies citing rising costs for materials and labor, an uptick in damaging storms, and higher claims costs exceeding premiums collected. State Farm specifically blamed the increase on these factors, noting that claims costs in Illinois amounted to $1.26 for every dollar in premium collected last year [1]. The company also cited the rising frequency and severity of hail damage claims, which were the highest in Illinois except for Texas.

Illinois Governor JB Pritzker has criticized the move, labeling it "unfair and arbitrary." He expressed concern that the increase will burden homeowners with additional costs without corresponding improvements in protection. The governor's statement highlights the broader issue of affordability in the housing market, which is already facing challenges due to factors such as inflation and immigration policies.

The situation in Illinois is not unique. Across the country, millions of owner-occupied homes lack home insurance coverage, leaving them vulnerable in the event of a disaster. According to the latest LendingTree study, 11.3 million U.S. owner-occupied homes are uninsured [1]. This underlines the importance of affordable insurance options and the need for policy adjustments that balance the risks faced by insurers with the financial realities of homeowners.

References:
[1] https://www.foxbusiness.com/economy/state-farm-hike-home-insurance-rates-27-state