State Farm defends Illinois home insurance price hike

CHICAGO (WLS) — The largest home insurer in Illinois is defending the looming rate hike that will impact 1.5 million State Farm customers.

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State Farm is set to raise home insurance rates by 27% beginning August 15, 2025.

The Bloomington-based insurer said the price increase comes as it anticipates more extreme weather, plus the rising repair costs from inflation.

Last year, for every dollar in premiums collected, State Farm paid out $1.26 in total costs.

The company told ABC7 its Illinois homeowners’ business has seen “unsustainable” losses in 13 of the last 15 years and needs to raise rates to remain financially strong.

“In Illinois alone last year, we paid out more than $638 million in hail damage claims,” State Farm spokesperson Gina Morss-Fischer said. “That was second only to the state of Texas, so these changes are taking effect today for new policies and for existing policies on August 15th.”

Governor JB Pritzker said he wants the Illinois Department of Insurance to take all possible actions to combat this.

The governor called on the general assembly to pass a bill during veto session.

State Farm issued the following statement:

“Illinois families deserve an honest conversation about insurance economics rather than political rhetoric. Governor Pritzker’s statements are factually incorrect. State Farm does not shift costs between states, and we have provided information to the Illinois Department of Insurance to demonstrate this fact. Our Illinois rates reflect Illinois-specific claims and risks.

The facts are simple: State Farm’s Illinois homeowners business has lost money in 13 of the past 15 years, including paying out $1.26 for every dollar collected in 2024. These losses are driven in part by severe weather damaging communities across the state. No company can absorb such losses forever and still be there for customers when disaster strikes.

State Farm has called Illinois home for more than a century. More than 21,000 people in Illinois proudly serve customers as State Farm agents, agent team members and State Farm employees. Our commitment is to keep rates competitive while staying financially strong-so we can deliver on our promises when people need us most.

We value our partnerships with state leaders and continue to work together toward finding solutions that allow us to continue serving customers and promote a healthy and competitive insurance market.”