Posted by I just received my 2025 rate increase notice from State Farm Insurance. Effective July 15, 2025, my new rate will be $148.46 per month on a home valued at $360k. That is a 17.8% increase over the previous monthly rate of $125.98. That comes out to an extra $269.76 per year, which is over two months of the previous payment. Looking at it another way, I will now be getting only ten months of coverage under my old rate. I know the cost of building materials and labor has increased, but this is also a result of the fires in California this past year. State Farm had to payout a large number of claims in California and this rate increase is the result. It doesn’t seem fair that my insurance rate has to increase because of something that happened in a different State.
But that’s the way a large insurance company like State Farm operates. They don’t care too much about what State you live in. A disaster that results in lots of claims will eventually impact all homeowners. It’s similar to that weather event back in 2021 that spiked the price of natural gas. Although the event happened in Texas over five years ago, customers across the country continue to pay a “weather event” fee every month. Every price increase means that I have to find the extra money somewhere. Since insurance is an essential expense, it means cutting back on non-essential expenses to cover the increase. An extra $22.48 per month doesn’t sound like much, but it means that I’ll have to spend less somewhere else.
My home is about average in size and cost. If I exclude the mortgage payment it costs about $650 per month for insurance, utilities, and property taxes. Even if you add my current mortgage payment, it is far less than renting a similar home. It is tempting to go out and look for a different insurance company when rates increase. Paying State Farm $2422 per year for home and auto insurance seems high compared to what I was paying ten years ago. I could raise the deductible on the homeowner’s policy from 1% to 2%. But I would then have to cover the first $7122 of any insurance claim. I expect that my mortgage payment will be less when it resets in September. I’ll have to wait and see if that covers the insurance rate increase. Sometimes it feels like a game of Life or Monopoly, except each time you move around the board, the price of everything increases, but your income stays the same.