The Auto Channel
The Largest Independent Automotive Research Resource
The Largest Independent Automotive Research Resource
Official Website of the New Car Buyer

State Farm to Cut California Auto Rates by $219 Million

Rate Reduction is the fourth for policyholders since 2004

Core News Facts - Auto rate cut of eight percent approved by California Department of Insurance, effective July 6, 2009

Since 2004, State Farm California has reduced auto rates four times, and returned a dividend, for a total savings to policyholders of more than $1 billion in premiums

Besides rate reductions, State Farm California policyholders also received a 15 percent dividend in March of 2007 totaling $195 million

State Farm Mutual Automobile Insurance Co. is the largest individual auto insurer in the state with 3.3 million policies

WOODLAND HILLS, Calif., May 14 -- State Farm's 3.3 million California auto insurance policyholders received welcome news today as the state Department of Insurance announced it has approved an eight percent, $219 million rate cut.

The 8 percent rate cut is a statewide average. The actual savings for individual policyholders may be different, depending on a number of rating factors.

State Farm's California Senior Vice President Rand Harbert pointed out the reduction was possible because of the improving long term trends in claims submitted to the company by policyholders.

"Our premiums are based on what we calculate we will need in the future to meet the obligations we have to our policyholders," the Woodland Hills-based executive said during a press conference with Commissioner of Insurance Steve Poizner, "and because our recent experience and trends are favorable, it allows us to pass along those savings to our customers in the form of lower rates."

"We are pleased to be able to help our customers at a time when many people are struggling financially due to the economic challenges we all face," added Harbert.

State Farm reduced auto rates in California by 7.6 percent in 2004 ($215 million); 4.2 percent in 2005 ($110 million); and 10.1 percent in 2007 ($266 million). The company also returned $195 million to policyholders in the form of a dividend in March of 2007. The effective date for the new rate cut is July 6, 2009.