State Farm, which insures one of every three vehicles in Illinois, has just imposed its largest single rate hike in 14 years.
Drivers insured by the Bloomington-based giant saw their rates jump, on average, 5.8 percent, effective Oct. 31. The Illinois Department of Insurance failed to post the increase, but the company confirmed the change.
As 2.7 million policyholders renew their insurance in the coming months, many will be in for an unpleasant surprise. State Farm has raised its prices consistently over the past few years, but usually in increments of 3 percent or less, so the increases have been less noticeable. For example, State Farm lifted rates on average 2.6 percent in February.
The last time State Farm hit its customers this hard was in 2002. Then, it hiked prices 8 percent, a spokeswoman said.
Between the two 2016 increases, State Farm will have increased Illinois auto premiums 8.4 percent. So a driver paying $1,000 in 2015 to insure her car this year will pay an extra $84. (In practice, rate hikes impact individual policyholders differently depending on various risk factors and whether they buy other products from State Farm.)
What caused the jump?
In a statement, the spokeswoman said claims costs are up in Illinois. The trends here are similar to elsewhere in the U.S., where State Farm has seen costs rise due to what it says are increased instances of distracted driving, lower gas prices leading to more cars on the road, and higher repair and medical costs.
State Farm, of course, isn't alone in charging more for car insurance. Virtually every other major insurer has increased pricing in the past few years, including Northbrook-based Allstate, the second largest in Illinois. Allstate, which insures about one in every 10 cars in the state, boosted rates for nearly 319,000 policyholders 6.9 percent last summer.
But State Farm's sheer size gives such a substantial increase more economic impact.
Its recent rate hikes haven't slowed its growth. In the past year, State Farm Mutual Automobile Insurance has seen its Illinois policyholder count increase 1.5 percent, according to filings with the state Insurance Department.
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