California Approves 17 Percent Rate Increase for State Farm

State Farm will be allowed to temporarily charge an extra 17 percent for homeowners’ insurance policies in California, after the state gave the company permission, in the wake of the catastrophic fires. The insurer will be allowed to charge the higher rate at least until a hearing later this year, the state announced on Tuesday.

The insurance giant already received a 20 percent rate increase last year, a move that a consumer watchdog group, as well as homeowners struggling to be paid after their homes were destroyed in January in the Los Angeles fires, criticized as unfair and unfounded.

State Farm requested the emergency rate increase in February, the month after fires ripped through the Pacific Palisades and Altadena neighborhoods of Los Angeles, razing over 16,000 homes and structures. The company — which insures one out of every five homes in California or roughly 1 million homeowner customers — had requested even more: a nearly 22 percent rate increase on homeowners’ policies, citing a “dire situation.”

California, like other states hit by natural disasters, has faced threats from major insurers: Raise rates, or we leave the state, said Carmen Balber, the executive director of Consumer Watchdog, which led the effort to oppose the rate increase in hearings this spring.

“The commissioner has shown a tendency to roll over in the face of insurer threats to leave,” Ms. Balber said. The increase “adds insult to injury” at a time when many homeowners insured by State Farm have reported delays or attempts by State Farm to lowball claims following the fires earlier this year, she added.

In a statement, Ricardo Lara, the state’s insurance commissioner, presented the rate increase as a difficult compromise for consumers. “Let me be clear: We are in a statewide insurance crisis affecting millions of Californians,” he said. “Taking this on requires tough decisions.”