California Insurance Commissioner Dave Jones on Wednesday announced he has obtained an agreement from State Farm General Insurance Co. to reduce their rental dwelling program policyholders’ rates statewide by an average of 40 percent.
The reduction is to be effective Feb. 1, 2017.
The reduction will result in an estimated $101.1 million savings to rental property owners and small business people, with an average savings to individual policyholders of $359 annually, according to the California Department of Insurance.
“This is good news for the approximately 200,000 State Farm Rental Dwelling policyholders, most of whom will receive a rate reduction as a result,” Jones said in a statement.
Under Proposition 103, passed by California voters in 1987, insurers must get approval from the insurance commissioner before increasing or reducing rates. The commissioner approves rates sufficient to cover claims costs, reasonable administrative expenses and a reasonable return for the insurance company, and has the authority to reject what he feels are excessive property/casualty insurance rates.
Whether a policyholder receives a decrease and the amount of the decrease depends on a number of factors, including the location of the insured property, and other individual risk characteristics and coverage features, according to the CDI.
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