CHICAGO (WLS) — The largest home insurer in Illinois is defending the looming rate hike that will impact 1.5 million State Farm customers.

ABC7 Chicago is now streaming 24/7. Click here to watch

State Farm is set to raise home insurance rates by 27% beginning August 15, 2025.

The Bloomington-based insurer said the price increase comes as it anticipates more extreme weather, plus the rising repair costs from inflation.

Last year, for every dollar in premiums collected, State Farm paid out $1.26 in total costs.

The company informed ABC7 that their homeowners’ insurance sector in Illinois has been experiencing “unsustainable” financial losses for 13 of the past 15 years, necessitating a rate increase to ensure financial health.

“Last year alone in Illinois, we settled over $638 million in claims related to hail damage,” explained State Farm representative Gina Morss-Fischer. “This amount was second only to that of Texas, leading us to implement changes starting today for new policies and for existing policies by August 15th.”

Governor JB Pritzker said he wants the Illinois Department of Insurance to take all possible actions to combat this.

The governor called on the general assembly to pass a bill during veto session.

State Farm issued the following statement:

“Illinois residents deserve transparent discussions about insurance economics instead of political talk. Governor Pritzker’s remarks are factually inaccurate. State Farm does not transfer costs between states, and we have provided evidence to the Illinois Department of Insurance to support this. Our Illinois rates are based on claims and risks specific to Illinois.

The facts are simple: State Farm’s Illinois homeowners business has lost money in 13 of the past 15 years, including paying out $1.26 for every dollar collected in 2024. These losses are driven in part by severe weather damaging communities across the state. No company can absorb such losses forever and still be there for customers when disaster strikes.

State Farm has called Illinois home for more than a century. More than 21,000 people in Illinois proudly serve customers as State Farm agents, agent team members and State Farm employees. Our commitment is to keep rates competitive while staying financially strong-so we can deliver on our promises when people need us most.

We value our partnerships with state leaders and continue to work together toward finding solutions that allow us to continue serving customers and promote a healthy and competitive insurance market.”