California Homeowners Receive More Bad News From State’s Largest Insurer
The latest announcement affects approximately 72,000 properties.
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Subscribe for free to get more stories like this directly to your inboxGiven the Golden State’s elevated risk for natural disasters, among other factors, homeowners have been hit with higher insurance premiums and even an inability to secure policies altogether in recent years. Last week, the state’s largest insurance company delivered the latest blow.
Tens of thousands affected
According to reports, State Farm will be discontinuing about 72,000 policies for California residences as early as this summer. Although the company reiterated its dedication to providing effective coverage for as many clients as possible, a recent statement asserted that it is simply unfeasible across much of the state.
“State Farm takes seriously our responsibility to maintain adequate claims-paying capacity for our customers and to comply with applicable financial solvency laws,” the company stated. "It is necessary to take these actions now.”
The latest evidence of a trend
According to early indicators, State Farm’s move is expected to impact coverage for about 30,000 homes and 42,000 commercial apartment buildings. That is the equivalent of about 2% of the company’s policies in California.
But many others in the state have already been impacted by similar announcements from State Farm and other insurers.
- Last year, the company cited “historic” cost increases in announcing it would not offer new home policies in the state.
- A subsequent update indicated that existing policyholders would receive a 20% hike in their premiums.
- Allstate announced in 2022 that high costs and wildfires contributed to its decision to pull out of California.
State Farm explains itself
A number of issues combined to impact a decision State Farm said “was not made lightly.”
According to the statement, its determination came “only after careful analysis of State Farm General’s financial health, which continues to be impacted by inflation, catastrophe exposure, reinsurance costs, and the limitations of working within decades-old insurance regulations.”
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