Farmers Insurance has secured approval from the California Department of Insurance (CDI) for a new homeowners' rating plan that will nudge premiums higher from mid-September and could signal how rate action later in the year will be structured across the market.
Effective Sept. 15, for new and existing customers with Smart Plan Home or Next Generation Home policies, the plan will raise the home/auto bundling discount from 15% to 22%, and introduce additional savings for homeowners who complete specific residential wildfire mitigation measures.
On a statewide basis, however, the filing equates to an average 1.5% increase in homeowners' premiums.
While a 1.5% statewide uplift appears modest, the headline figure masks the way increases are likely to be felt on the ground. Farmers has made clear that households which do not bundle or invest in mitigation will shoulder more of the adjustment, while those that meet the new criteria could see flat or even lower rates.
In practice, that means riskier or unbundled accounts should expect upward movement as the new plan rolls out, particularly in areas where wildfire exposure, reinsurance costs and rebuilding inflation have eroded margins. The key question will be how much of the increase is concentrated in specific ZIP codes and occupancies as Farmers refines its appetite.
“We continue to see encouraging signs that the California insurance marketplace is strengthening and we want to be well-positioned to grow and provide improved coverage offerings to California consumers,” said Behram Dinshaw, president of personal lines for Farmers Insurance. “Together, our new homeowners and auto rating plans provide consumers with multiple opportunities to save, especially through increased discounts for bundling policies.”
The revised plan ties premium relief directly to both multi‑line relationships and household‑level risk reduction. The most competitive pricing will be reserved for customers who bring their auto business to Farmers and take steps to harden their properties against wildfire, in line with the state’s push to reward mitigation under Insurance Commissioner Ricardo Lara’s Sustainable Insurance Strategy.
That structure is a blueprint for how additional rate increases, anticipated later in the year, may be packaged: incremental statewide hikes offset by more aggressive credits for “preferred” behaviors. Regulators remain under pressure to keep coverage available and affordable, while carriers need to rebuild rate adequacy and manage catastrophe exposure. Enhanced bundling credits and mitigation discounts give insurers more levers to retain desirable risks without resorting to blunt, broad‑based hikes.
The Farmers plan incorporates key elements of Lara’s Sustainable Insurance Strategy, which is intended to bring private capacity back into stressed parts of the state by allowing more risk‑based pricing tools, recognizing mitigation efforts and providing a path to gradual rate changes, alongside efforts to stabilize the California FAIR Plan.
Farmers expects the filing to support several thousand new policies over the next two years in CDI‑designated distressed areas, where homeowners have faced shrinking choice and growing reliance on the FAIR Plan. Since earlier this year, the carrier has been targeting homeowners in these communities and reports nearly a 10% year‑over‑year increase in new business in those locations.
“Farmers is proud to be one of the few home insurers that never stopped offering new home policies in the state and we remain committed to the California marketplace,” Dinshaw said. He credited the CDI and other stakeholders with “working toward meaningful solutions to reinvigorate the state’s insurance marketplace.”
According to the company, customers will still need to meet all applicable underwriting guidelines to qualify for coverage, and availability will continue to vary by geography and risk profile. In higher wildfire‑exposed areas, agents and brokers should expect ongoing scrutiny of construction, defensible space and other mitigation steps, even as new capacity comes onstream.
Competitors and intermediaries will be watching closely to see whether similar templates follow Farmers’ lead, and whether the combination of modest average rate hikes, targeted incentives and tighter underwriting can meaningfully rebuild homeowners' capacity in California’s most stressed communities without triggering further political pushback on pricing.
