State Farm is set to raise home insurance rates in Illinois by an average of 27% starting this summer. The increase will begin on July 15 for new customers and August 15 for policy renewals. In addition to the higher premiums, homeowners will be required to carry a minimum 1% wind and hail deductible, which means they will pay more out of pocket when claims involve those causes.
The insurer says the hike is needed because Illinois has seen a sharp rise in severe weather, especially hail and wind storms, driving up the number and cost of claims. State Farm noted the state has experienced more hail damage than any other state besides Texas. They also pointed to higher costs for labor and materials, fueled by inflation, making home repairs more expensive.
Despite these explanations, the move has sparked anger from Illinois politicians. Governor J.B. Pritzker called the increase unfair and said it overstates the actual losses in Illinois. He argued that State Farm is charging Illinois homeowners for damage that happened in other states, including places affected by wildfires and hurricanes. Pritzker urged lawmakers to pass a law to stop insurers from making large rate jumps like this.
The Illinois Department of Insurance (IDOI) is also questioning State Farm’s justification. Officials say the company has repeatedly refused to provide detailed information about how it set the new rates, raising concerns about whether the hike is truly based on Illinois-specific claims experience.
State Farm said it priced premiums based only on risks in Illinois. However, the company’s numbers show a direct loss ratio—how much is paid in claims compared to premiums collected—of 93.3%, which is higher than competitors in the state. Last year, State Farm collected $1.9 billion in premiums but had to pay out $1.77 billion in claims in Illinois alone.
This decision to raise rates heavily in Illinois matches a pattern for State Farm, which often pushes big increases in states where it has many policyholders. For example, earlier this year, it won approval for a 17% hike in California after major wildfires, later asking to raise that increase to 30%.
More broadly, State Farm reported big losses on its homeowners and commercial property insurance business across the U.S. in 2024, with underwriting losses reaching $3.5 billion. Severe weather events like storms and hail are driving up damage costs, making it harder for insurers to cover claims without raising rates.
In Illinois, these storms are growing stronger and more frequent, partly due to warmer weather. This trend means insurers face bigger risks and expenses. While hurricanes and wildfires often grab national headlines, hail and wind storms quietly cause billions in damage.
For now, Illinois homeowners insured by State Farm should expect bigger bills and higher deductibles soon. The debate between the state government and the insurer over whether the hikes are fair is likely just beginning.