State Farm seeks California auto rate cut after major increase last year

Emily Miller ; 2025-11-21 05:11:02

Proposed reduction arrives as competition in the market intensifies

Motor & Fleet

By Kenneth Araullo

Nov 25, 2025Share

State Farm Mutual Automobile Insurance Co. has requested approval to reduce average private passenger automobile insurance rates by 6.2% in California, citing a decline in physical damage losses.

The proposed reduction would take effect in the first quarter of 2026, subject to regulatory approval from state insurance regulators.

The filing marks a shift in the company's pricing strategy less than a year after implementing a 17.7% rate increase for its independent California private passenger auto program. State Farm attributed the requested reduction to fewer claims, which have lowered both comprehensive and collision loss experience across its customer base.

Are you an insurance innovator? Tell us — we want to hear your story

Dan Krause (pictured above), senior vice president at State Farm, said in a statement that the proposed reduction reflects "increasingly competitive rates."

This statement comes as California's auto insurance market faces intensifying competition. In the third quarter, auto insurance shopping demand in California surged 11% year-over-year, with consumer activity particularly elevated among older policyholders and direct distribution channels, signaling heightened price sensitivity across the market.

Read more:Older consumers lift Q3 auto insurance demand

Despite this competitive market, the company maintains significant market share in California as the largest personal auto and homeowners' writer in the state. State Farm has also implemented rate reductions in Georgia and Florida as loss trends have improved in those markets.

State Farm is one of the top 10 largest insurance companies in Georgia. Read this guide to help insurance brokers review all providers and find the best options for clients statewide.

During the third quarter, rate filings in the state also showed considerable variance, with approximately one-third of submissions representing decreases averaging 4.2%, while 35% represented increases averaging 5.1%, and 31% remained rate-neutral.

California Insurance Commissioner Ricardo Lara's office previously approved rate adjustments for State Farm in the property insurance segment, with an administrative law judge's ruling resulting in approval of interim property rate increases ranging from 15% to 38% in May.

The divergent rate movements between auto and property insurance reflect different loss experiences across the company's product portfolio, with State Farm adjusting rates to match evolving claims patterns in their respective markets.