Anticipating an improved homeowners insurance market in California thanks to the spreading adoption of Insurance Commissioner Ricardo Lara’s Sustainable Insurance Strategy, Farmers Insurance will eliminate the cap on the number of homeowners insurance policies it offers in California, effective immediately.
Farmers Insurance wants approval for an average 6.99% rate increase in California and says it will boost policies in force in wildfire stressed regions by at least 5% if the filing goes through.
That could mean 5,596 new policies or more over the next two years, according to a filing sent to the Department of Insurance on Nov. 21.
The carrier already removed its cap on new property business. For the past year, it limited new homeowners, condo, and renters policies to 9,500 a month. That limit is now gone, effective immediately.
Farmers said claim severity keeps climbing for theft, fire, and liability losses. Frequency has dropped, but severity jumped ahead of it, pushed by inflation in labor and materials and heavier litigation costs tied to liability cases. The company said the trend looks set to continue.
Water losses told a different story. Frequency dropped, but severity rose as more customers shifted to higher deductibles. Farmers said it has been working with homeowners to install water shut off devices to rein in future losses.
The company emphasized its support for California’s Sustainable Insurance Strategy rolled out by Insurance Commissioner Ricardo Lara.
To aid in this effort, in early 2026, Farmers will begin marketing directly to approximately 300,000 consumers in the distressed areas, as well as providing local Farmers agency owners with resources to conduct additional marketing outreach.
Farmers said the new framework helps stabilize the state’s property market by increasing access to coverage and reducing reliance on the FAIR Plan, the state’s insurer of last resort.
Farmers wants the rate increase to take effect Sept. 15, 2026. The filing includes a forward looking wildfire catastrophe model and net reinsurance costs, both required under the Sustainable Insurance Strategy. Farmers also wants to raise its home and auto bundle discount from 15% to 22%.
The filing, which requests a 6.99% average statewide rate increase, also proposes an updated discount for customers who choose to bundle their Home and Auto insurance with Farmers, offering a significantly improved 22% Home/Auto discount, up from 15%.
Behram Dinshaw, president of personal lines, said the carrier is doubling down on its commitment to California homeowners and expanding choice statewide. Farmers began reopening property lines late in 2024 after more than a year of being closed to new business.
“By removing the cap on offering new homeowners policies, Farmers is doubling-down on its commitment to California homeowners, expanding choice and availability for consumers across the state,” said Behram Dinshaw, president of personal lines for Farmers Insurance.
We are reaffirming our commitment to serving the needs of residents by submitting a new Sustainable Insurance Strategy-inspired rating plan which is designed to expand our offerings to more homeowners across California.
Behram Dinshaw, president of personal lines
While the homeowners insurance market in the state has been a challenge for some time, Farmers, the largest property casualty insurer headquartered in California, has remained dedicated to helping maintain an open and viable insurance marketplace by continuing to offer new homeowners insurance policies in the state without stoppage.
Dinshaw said improvements in the marketplace and changes tied to the Sustainable Insurance Strategy helped drive that decision.
Farmers had been writing new homeowners business even during the capped period, previously limiting volume to 7,000 policies a month.
California remains Farmers Insurance Group’s biggest state. It wrote $7.91 bn in direct premiums, up from $7.55 bn the year before and far ahead of Texas, which accounted for $3.86 bn.
Best’s Credit Report said Farmers’ wildfire mitigation steps helped the company navigate the 2025 wildfire season and post a 99.8% combined ratio while adding nearly $200 mn in surplus. A small underwriting loss was offset by strong investment income.
“Farmers has a long and proud history in serving the insurance needs of Californians and with today’s announcement, we want to send a strong signal that we remain committed to doing our part to continue improving the insurance marketplace in the state,” added Dinshaw.
New customers will be required to meet all applicable underwriting guidelines to be considered for coverage. Consumers with questions are encouraged to connect with their local Farmers agency owner.
