California approves State Farm's request to increase rates

OAKLAND, Calif. - California's Department of Insurance approved an insurance rate hike for State Farm.

Experts predict this hike is an average of 20% throughout the state. But that number could be higher or lower for individual policyholders. People who live in wildfire-prone areas will likely see some of the biggest increases.

Finding affordable homeowners insurance in California is getting harder for new homeowners.

State Farm announced it would not write policies due to increasing costs and increasing wildfire risks. 

That was a blow to potential buyers since State Farm is the largest insurer in the state. 

All State, the fourth-largest insurer, also announced it would not write newer policies. 

And Farmers, the second-largest insurer, is limiting how many policies it would write. 

These announcements were all in the last year and a challenge headed into this new year, when experts say with cooling interest and mortgage rates, we could see a sea of new home buyers.

"Interest rates going down are great for affordability," Patrick Carlisle, chief market analyst for Compass, told KTVU on Tuesday. "Interest rates soaring in the last two years are what hammered affordability. "If we do indeed get more homes on the market, that will certainly help." 

The state insurance commissioner says homeowners can look to its FAIR Plan, a last-resort policy through the government meant to be a temporary solution with basic coverage until new homeowners find a permanent policy.