State Farm plans big insurance hike for Illinois homeowners, citing severe weather

Illinois homeowners are facing a sharp increase in insurance premiums soon, as State Farm implements a hike for both new and renewing homeowners’ policies across the state.

According to State Farm, the change is necessary due to ongoing financial pressure from increasingly severe weather and rising claim costs. The rate increase is scheduled to go up by 27% on average, according to several media reports.

“Severe weather – wind/hail and tornadoes – is increasing in Illinois," according to a statement on the State Farm website. “Trends in recent years indicate damaging storms are more frequent here. In fact, Illinois had more hail damage claims than any other state except Texas in 2024.”

The news of the increase prompted a statement from Illinois Gov. JB Pritzker, who asked the Illinois General Assembly to enact a legislative solution during the veto session.

“I am deeply concerned by State Farm’s unfair and arbitrary insurance rate hike on Illinois homeowners,” Pritzker said.

“These increases are predicated on catastrophe loss numbers that are entirely inconsistent with the Illinois Department of Insurance’s own analysis – indicating that State Farm is shifting out-of-state costs onto the homeowners in our state. Hard-working Illinoisans should not be paying more to protect beach houses in Florida."

According to the company’s filing, State Farm has experienced a sustained trend of catastrophe losses exceeding what it collects in premiums. In 2024, the company reported a loss ratio of $1.26 paid out for every $1 earned.

To help offset those losses, State Farm is also introducing a mandatory wind/hail deductible for Illinois homeowners. Under the new policy, customers must maintain at least a 1% deductible, based on the insured value of their home, for wind and hail claims. The company has said this step is aimed at managing costs while giving customers options to adjust their premiums by choosing higher deductibles.

“Inflation matters. The costs of materials and labor have risen, affecting how much it costs to repair or rebuild homes. In the insurance business, the rates we charge are set in advance to cover potential future losses, including the costs to rebuild homes. As repair costs continue to rise, home insurance rates are as well,” according to a statement on the State Farm website.

Pritzker said these changes will cost Illinois homeowners hundreds of additional dollars per year without a state-based justification.

“Over the past six years, our state economy has flourished based on transparent markets and fair competition,” Pritzker said." State Farm’s actions are antithetical to the core principles that the Illinois business community is built on.

“Today, I’m directing the Illinois Department of Insurance to take all available regulatory action to enforce the law and ensure a level playing field for Illinois homeowners.”

State Farm’s move follows similar actions by other insurers. Allstate recently filed for a 14.3% increase in Illinois homeowners’ rates, underscoring a broader trend of rising insurance costs driven by inflation, rebuilding expenses, and more frequent natural disasters.