State Farm Will Cut Auto Rates an Average of 8.4%

State Farm Mutual Automobile Insurance Co. said Monday it will lower its auto insurance rate level in California an average of 8.4%, effective Dec. 30.

Combined with previous cuts since September 1995, the move will mean the company has cut rates almost 20% in 3 1/2 years.

State Farm is both the largest U.S. and California auto insurer. However, it has lost California market share in recent years as competition in the industry has heated up. Rates have been cut by virtually all insurers in the last year, led by Safeco, Automobile Club of Southern California and Progressive. These moves have lowered average California insurance costs by more than 5% this year, according to the California Department of Insurance.

Insurance rates have fallen in California as claims have fallen and because of legislative and proposition-inspired regulation changes, as well as improved efforts to stop organized fraud.

The latest rate reduction will amount to an annual premium savings of $183 million for State Farm’s nearly 3 million California policyholders, said Greg Jones, State Farm vice president-California.

“When our policyholders are having fewer, less expensive claims, we can offer lower rates in return,” Jones said.

Part of the latest rate reduction is State Farm’s introduction of a 10% multiple-line discount for customers who also have a qualifying State Farm homeowners, life or health insurance policy.

On average, prices for liability, uninsured motorist, collision and comprehensive coverages will drop the most, Jones said. Comprehensive coverage pays for losses such as those from theft, storm damage, fire, vandalism and glass breakage.

Overall changes in premiums for individual motorists will vary, depending on the coverages they carry, the kind of car insured, their driving record, how much they drive the car, their years of driving experience and other factors, according to Jones.

State Insurance Commissioner Chuck Quackenbush, who approved the rate cut Friday, said the latest discount will push State Farm’s rates below 1986 levels.