The final increase rate for State Farm's California renters insurance, commonly referred to as landlord insurance, has been set at 32.8%. This is 5.2 percentage points lower than last year's emergency increase of 38%.

Looking at the numbers, it is still a significant increase. However, for landlords who have already paid the premium at 38%, the situation is a bit different. They will receive a refund for the difference.

Let's summarize the timeline briefly. In the spring of 2025, State Farm General requested an emergency temporary increase due to financial deterioration following the LA wildfires.

At that time, homeowners insurance was temporarily approved for a 17% increase, renters insurance for 38%, and condo insurance for 15%. These rates took effect on June 1, 2025.

Subsequently, a formal rate review took place, and on March 6, 2026, a settlement was submitted by the California Department of Insurance, consumer group Consumer Watchdog, and State Farm.

In the settlement, the homeowners insurance rate of 17% was maintained. The renters insurance rate was reduced from 38% to 32.8%, and the condo insurance rate was lowered from 15% to 5.8%.

Conversely, renters insurance saw a slight increase from 15% to 15.65%. It's important to note that not all products saw a decrease.

This settlement was finalized after review by an administrative law judge, with Insurance Commissioner Ricardo Lara signing the final order on July 23, 2026. It is now a legally binding decision.

For landlords, the most pressing question is likely about refunds. They will receive a refund for the difference between the premiums paid from June 1, 2025, until the final rate takes effect, specifically the difference between 38% and 32.8%.

Additionally, an annual interest of 10% will be applied. Considering current deposit rates, this is quite a generous condition.

Consumer Watchdog estimates that the total refund amount for renters insurance policyholders will be $17 million, and $35 million for condo insurance policyholders, excluding interest.

The amount individual landlords receive may not be substantial. If the annual premium reflecting the 38% increase was $3,000, the difference when recalculated at 32.8% would be about $113 per year, plus interest.

However, for those with multiple properties, the total can add up to a significant amount. It has not yet been confirmed whether the refund will be issued as a check or as a credit toward future premiums.

State Farm is required to inform eligible parties about the refund process. If there is no contact after a few weeks, it is advisable to reach out to the assigned agent or customer service, mentioning the final order dated July 23.

Now, let's take a broader view. Even accounting for refunds, a 32.8% increase is still an unusual level for a single year.

Having observed the rental income structure of Korean landlords for a long time, it is rare for insurance premiums to jump this much at once. Property taxes and management fees are predictable, but insurance has now become the most uncertain cost item.

When calculating rental yields, do not use last year's insurance premium figures. Many areas in California have rent increase caps, making it difficult to pass on cost increases directly to tenants.

Therefore, if I were a landlord, I would first carefully check the coverage details and deductibles on the renewal notice. Increasing the deductible can help lower the premium to some extent.

Secondly, I would obtain quotes from other insurance companies. However, in California, many companies either do not accept new contracts or have strict requirements, so options may be more limited than expected.

That said, I do not recommend canceling policies without careful consideration. Once a contract is terminated, it can be difficult to re-enter the market.

There are positive aspects to the settlement as well. State Farm has agreed not to deny new blanket renewals for homeowners insurance throughout 2026.

Additionally, State Farm will have to undergo another rate review by 2027 at the latest. This means there may be another rate adjustment discussion next year.

The suspension of renewal denials is a promise regarding homeowners insurance, so it is wise to confirm whether this applies equally to renters insurance through the terms and notices.

I will also add a note regarding tenants. The settlement includes a provision offering a one-time 2.5% discount to renters renewing their insurance.

If landlords require tenants to have insurance, sharing this information can be a good way to maintain a positive relationship.

Insurance conditions vary significantly based on the age of the building, local wildfire risk, and coverage limits. Since individual circumstances differ, it is advisable to confirm specific decisions with an insurance agent or expert.

In summary, this decision has reduced the increase slightly and will refund overcharges with interest. However, the burden of insurance premiums has not significantly decreased.

Take this opportunity to recalculate the insurance costs for your properties. It is also important to develop a habit of checking whether the refund notice matches the amount and duration when it arrives.