State Farm, California’s top insurance provider, is asking for a temporary 22% rate hike for homeowners’ policies. The company says it’s facing a "dire" financial crisis after last month’s destructive wildfires in Los Angeles.

In a letter to California’s insurance commissioner, State Farm revealed it’s already handled over 8,700 claims and paid out more than $1 billion. The company warns that the total costs from these fires will likely be the highest in its history. They argue the emergency increase is crucial to keep their business stable and protect customers across the state.

California homeowners already deal with some of the steepest insurance premiums nationwide, largely because much of the state is considered high-risk for wildfires. This has made it tough for many to afford coverage or even enter the housing market.

The state’s Insurance Commission is reviewing State Farm’s request, calling it a matter of urgent concern. Meanwhile, consumer advocates are pushing back. Carmen Balber of Consumer Watchdog criticized the move, saying State Farm is trying to profit off homeowners already struggling to recover from disaster.

This isn’t the first time insurance companies have cut back in California. Last year, State Farm stopped offering new policies and began dropping 30,000 existing ones. Many homeowners have had to turn to the state’s FAIR plan, which offers less coverage at higher costs.

Adding to the tension, the Insurance Commission recently blocked insurers from canceling or refusing to renew policies in areas hit by the wildfires. As California continues to grapple with wildfire risks, this rate hike request highlights the growing challenges for homeowners and insurers alike.