If you’re a homeowner in Illinois, you might have noticed your insurance bill creeping up—and State Farm’s latest announcement isn’t going to ease that pain.
The insurer just revealed it will be raising home insurance rates by a whopping 27.2%, which translates to an extra $746 on the average annual premium.
Naturally, this has stirred up quite a storm.
Why Are Rates Going Up So Much?
State Farm says the rate hike isn’t arbitrary.
According to them, the money they’re paying out in claims far exceeds what they collect from premiums.
In fact, last year for every $1 they collected in Illinois, they had to pay out $1.26 in claims.
The year before, it was even worse at $1.30.
The main culprit? Hail damage.
Illinois saw the second-highest number of hail-related claims in the U.S. last year, just behind Texas.
On top of that, rising costs for labor and materials to fix homes have pushed repair bills higher, forcing insurers to adjust prices.
Lawmakers Push Back Against Hikes
But this explanation hasn’t sat well with everyone.
Illinois Governor JB Pritzker slammed the increases as “unfair and arbitrary,” promising to fight for better protections for homeowners dealing with soaring insurance costs.
Illinois is somewhat unique because insurers don’t have to get state approval to raise homeowners insurance rates.
Once companies file their new rates with the Department of Insurance, the hike usually goes through without much pushback. That’s a sore spot for many critics.
It’s Not Just State Farm — Others Are Raising Rates Too
State Farm already raised rates by 12.3% last year, but they’re not alone.
Insurance giant Allstate has also increased rates by 14.3% earlier this year and 12.7% in 2024 for Illinois homeowners.
Governor Pritzker has accused State Farm of using Illinois policyholders to cover losses elsewhere in the country, saying, “Hardworking Illinoisans should not be paying more to protect beach houses in Florida.”
Illinois House Speaker Emanuel Chris Welch joined the chorus, calling the hikes “wrong” and calling for more accountability.
The Debate Over Regulation and Market Stability
While some lawmakers push for tighter controls to protect consumers, others worry about unintended consequences.
Republican State Representative Jeff Keicher, who’s also a longtime State Farm agent, warned that heavy regulation could push insurers out of the market altogether.
Keicher pointed to California’s experience, where strict rules have reportedly caused several insurers to scale back or stop offering coverage amid climate challenges.
This has left many homeowners struggling to find insurance at all.
California’s Insurance Crunch Serves as a Warning
In California, over half of residents reported in 2024 that they faced either rising premiums or had been dropped by their insurance company entirely.
That kind of market contraction has made lawmakers cautious about introducing aggressive rate controls that could backfire.
Illinois Lawmakers Look to New Solutions
In response to the backlash, Illinois lawmakers are fast-tracking proposals to give consumers more protection.
Last year, Governor Pritzker signed a law allowing the state to review and block excessive rate hikes in large group health insurance plans.
Now, some want to apply similar oversight to homeowners insurance.
Under these proposals, insurance companies would have to back up their rate increases with several years of data.
Regulators could reject hikes deemed “excessive, inadequate, or unfairly discriminatory,” giving homeowners some breathing room.
Insurance Industry Pushes for Stronger Homes to Combat Rising Risks
Beyond regulation, the insurance industry itself is advocating for changes to make homes more resilient against natural disasters.
That includes tougher building standards and better construction practices to reduce the damage caused by storms, hail, and other climate-related events.
What This Means for Homeowners
For Illinois homeowners, rising premiums are a tough pill to swallow, but the situation is complex.
Insurance companies are grappling with bigger payouts, lawmakers are debating how to protect consumers without scaring away providers, and the industry is pushing for homes built to withstand the increasing threat of severe weather.
If you’re a homeowner in Illinois, it’s a good idea to stay informed, shop around for the best coverage, and consider upgrades that might make your property more disaster-resistant.