Louisiana drivers insured by State Farm are expected to see higher premiums after the insurance giant was approved to increase rates by a significant margin.
Insurance Commissioner Jim Donelon said more than a million people will be impacted by the 17.3% rate hike.
The driving force behind State Farm’s increase was said to be the surging inflation affecting various aspects of the auto insurance industry.
Specifically, Donelon said the rising cost of labor for auto repairs and the skyrocketing expenses of parts and equipment for damaged vehicles have compelled State Farm to impose these adjustments.
The insurer began rolling out the rate increase after obtaining approval from the state in June, with WBRZ2 reporting that some drivers saw as much as a 33% hike in their latest insurance bills.
The extent of the impact on individual policyholders depends on the specific coverage they have, according to Donelon.
“The 45% of our drivers who drive with minimal limits, and another 12% who drive uninsured, will not see the brunt of this coverage because they don't buy collision and comprehensive,” he said.
State Farm reduced its car insurance rates by nearly 10% in 2020. Rates began escalating again in 2021, albeit by a lower 4.3% increment.
“I refer to State Farm as the Cadillac of insurers in America,” said Donelon. "They’re everywhere, they have a big reputation, big name recognition, and they have a reputation for good service. Therefore, they can charge more. If the cost is too high, it's a good idea to compare with other companies.”
When asked if other insurers will follow, the commissioner said there are none “at the moment” but that he expects it will be the case at some point.
State Farm also implemented a 6% rate increase in Illinois last June. This was the second time that it implemented a rate hike there this year.
Allstate additionally received approval for a 4% rate increase in California, with another nearly 40% hike still under consideration.
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