A judge and Insurance Commissioner Ricardo Lara approved the hike, which will see average home insurance premiums rise by 17 percent. 

Condo owners and renters will also see average increases of 15 percent, while rental property owners will be hit hardest with a staggering 38 percent jump. 

'It is unthinkable that State Farm would do this after so many families in the area were affected by wildfires,' said Los Angeles native Andrea Smith, referencing the blazes that ravaged parts of the city in January.

The rate hike follows a year-long standoff between the insurer and the state, which regulates premium increases. 

Last year, State Farm threatened to withdraw from California entirely unless it was allowed to raise prices. Originally, the company proposed even steeper hikes. 

The newly approved increases — the second in just two years — will begin hitting policyholders as early as next month. 

State Farm says the move is necessary to avoid financial collapse, pointing to billions in payouts tied to recent wildfires. 

Experts had warned that price hikes were inevitable as insurers faced massive payouts for wildfires that severely damaged the Pacific Palisades neighborhood and thousands of other homes across Los Angeles County. 

State Farm says the latest round of price increases is necessary to stop the company going bust, especially in the wake of the devastating Los Angeles fires which damaged its bottom line further. 

State Farm has so far received nearly 12,700 claims from wildfire victims, and has paid customers more than $3.5 billion, the San Francisco Chronicle reported. 

A spokesperson for the company described the increase as 'a critical first step for State Farm General's ability to continue serving our California customers.' 

'SFG still must continue building sufficient capital for the future,' it added.

Judge Karl-Frederic J. Seligman who approved the insurer's case, said the deal 'represents a fundamentally fair, adequate, and necessary measure.'

He added that it is 'effectively functioning as a rescue mission to stabilize State Farm's financial condition while safeguarding policyholders.'