State Farm has reported significant financial losses due to the devastating wildfires that swept through Los Angeles in January 2025. The company has paid out $2.45 billion across more than 12,200 claims related to these fires, which began on January 7 and caused extensive damage to properties in the area.
As California’s largest homeowners and personal auto insurer, State Farm covers around 250,000 homes and 880,000 vehicles in Los Angeles County. Following the wildfires, the company activated its full catastrophe response teams to handle the surge of claims from affected customers.
Initial estimates from State Farm indicated that direct losses from the fires could reach as high as $7.6 billion. After accounting for reinsurance, the company expects to retain around $212 million in losses, according to information from AM Best.
In response to the financial impact, California Insurance Commissioner Ricardo Lara has approved a temporary rate increase for State Farm General’s property insurance. This increase, ranging from 21.8% to 38%, comes with conditions, including a pause on policy nonrenewals and cancellations in California until the end of 2025. Lara has also asked State Farm’s parent company to inject $500 million into its California subsidiary. The rate changes will remain in effect only if the company can provide sufficient justification for this emergency filing during a public hearing scheduled for April 8.
The financial challenges for State Farm are not limited to the recent wildfires. In 2024, the insurer faced an underwriting loss of over $6 billion, though this was an improvement from a staggering $14 billion loss in 2023. The previous year’s catastrophic events had a profound impact, with State Farm paying out approximately $11.4 billion in claims related to various disasters. Notably, in mid-July 2024, severe storms across multiple states resulted in roughly 14,000 claims.
As of March 2025, insurance payouts related to the California wildfires have exceeded $12 billion, nearly doubling the $6.9 billion reported in February. The ongoing financial strain from these disasters highlights the challenges faced by insurers in managing risks associated with climate-related events.