Severe weather and rising costs blamed for the increase
July 16, 2025
-
Illinois homeowners face an average 27% premium spike as State Farm cites severe weather and rising costs.
-
Governor Pritzker blasts the hike as unfair, alleging out-of-state losses are being shifted onto Illinois policyholders.
-
State Farm insists Illinois premiums reflect only in-state risk, as extreme storms increasingly hammer the Midwest.
You might think that storm-ravaged states like Texas, Florida and California would be hit with the biggest insurance rate hikes. But State Farm is rolling out steep insurance premium hikes for Illinois homeowners, igniting a political and consumer backlash over rising costs and accusations of unfair pricing practices.
The Illinois-based insurer said it will raise homeowners insurance rates in the state by an average of 27%, citing a surge in severe weather events and escalating costs to rebuild homes.
The rate increase will take effect July 15 for new customers and August 15 for renewals. Alongside higher premiums, State Farm will now require homeowners to carry at least a 1% wind and hail deductible. Customers who dont select this option will automatically be billed at that level.
Hail damage second only to Texas
State Farm said in filings with the Illinois Department of Insurance (IDOI) that Illinois ranks second only to Texas in hail damage, driving substantial catastrophe losses.
Over the past 15 years, the insurer said Illinois catastrophe losses exceeded its annual catastrophe provision in 13 years, signaling persistent underwriting pressure. In 2024, State Farm said it paid out $1.26 in claims for every $1 it collected in premiums from Illinois homeowners, blaming rising costs of labor and building materials for worsening results.
The cost of covering Illinois homeowners losses is exceeding the premiums were earning an indication we need to adjust prices, the company said in a statement.
The rate hike has provoked fierce criticism from Illinois Governor J.B. Pritzker, who labeled State Farms increases unfair and arbitrary. Pritzker claimed the insurers catastrophe loss calculations are inconsistent with the IDOIs own analysis and accused State Farm of passing along out-of-state losses to Illinois consumers.
Hard-working Illinoisans should not be paying more to protect beach houses in Florida, Pritzker said, calling on state lawmakers to pursue legislation during the upcoming veto session to curb what he termed severe and unnecessary rate hikes.
State Farm pushed back, maintaining that its Illinois premiums reflect only Illinois-specific risk, not losses from wildfires, hurricanes, or earthquakes elsewhere. The insurer reported $1.9 billion in direct premium earned and $1.77 billion in direct losses in Illinois last year, producing a 93.3% direct loss ratio well above its closest competitors. State Farm insures roughly one-third of Illinois homeowners.
IDOI, meanwhile, expressed concern over State Farms rate filing, saying it has repeatedly requested more details to verify whether the companys proposed hikes are based purely on Illinois experience. They have repeatedly refused to provide the requested information, the agency said.
Central U.S. is being hard-hit
State Farms move reflects a broader trend of severe convective storms battering the central U.S., causing billions of dollars in damage even if such events dont generate national headlines like hurricanes. Meteorologists warn that warming weather patterns are contributing to more intense storms outside traditional tornado seasons.
The Illinois hike is not an isolated move for State Farm. Earlier this year, the insurer secured approval for a 17% homeowners rate increase in California following devastating Los Angeles wildfires and later sought to raise that request to 30%. Nationally, State Farm reported a $3.5 billion underwriting loss in its homeowners and commercial multiple perils business for 2024.