Farmers Files to Expand Coverage And Raise Rates for California Small Businesses

Farmers Insurance filed an upgraded business insurance rating plan to expand commercial insurance coverage for business owners across the state and a rate hike of 15%.

The plan, which incorporates elements from the Sustainable Insurance Strategy, includes coverage in in areas identified by the California Department of Insurance as wildfire distressed. Zurich in June filed a plan under the Sustainable Insurance Strategy, an effort by Insurance Commissioner Ricardo Lara and the California Department of Insurance to address the state’s insurance market crisis

The Travelers Companies in April said it intends to expand its homeowners insurance offerings across California. Travelers notified the CDI it intends to expand homeowners insurance availability across the state, explaining the move is due to the Sustainable Insurance Strategy.

The Sustainable Insurance Strategy, a response to carriers curtailing or halting the writing of homeowners insurance in California, has been cited by several carriers in announcements to return to writing business in the state.

Farmers late last year announced it would eliminate a cap on the number of homeowners insurance policies it offers in California. The cap removal was made in anticipation of an improved homeowners insurance market in California, according to the carrier. Farmers homeowners offerings had been capped at 9,500 new policies per month.

The destructive January 2025 L.A. wildfires, which included the Eaton and Palisades fires (the second and third worst in state history) cost several large carriers in excess of $1 billion, are seen as a tipping point for the state’s insurance crisis. In response to the L.A. wildfires, several regulatory changes have been enacted and numerous pieces of state legislation were passed or are making their way through Legislature.

The carrier’s new proposed rating plan focuses on commercial insurance coverage offerings targeting habitational (apartments, condominiums, planned unit development communities), auto service shops, commercial real estate, retail, office, service, and wholesale business segments.

The proposed plan calls for Farmers to write more than 1,500 new business owner and business property insurance policies in wildfire distressed areas over the next two years. It proposes an effective date of Feb. 1, 2027.

Rates will vary by policy type and location, but the plan anticipates a statewide average upward rate adjustment of more than 15%.

Business insurance customers will be required to meet underwriting guidelines to be considered for coverage.

Top photo: 2025 Pacific Palisades Fire. Photo by CalFire.

Topics California Commercial Lines Business Insurance Agribusiness