State Farm Insurance to Cut Homeowners and Renters Policies in California
State Farm Insurance has announced that they will be reducing their homeowners and renters insurance policies in California, affecting approximately 30,000 policyholders. Additionally, the insurance company will not be renewing 42,000 commercial apartment policies. These changes are set to start in July and August and will continue over the next year.
The decision was attributed to the growing and unsustainable wildfire damages in the state. State Farm’s drop in available capital from $4.1 billion in 2016 to $1.3 billion in 2023 has also played a role in their decision.
The Personal Insurance Federation of California stated that State Farm held on longer than other insurers in the face of increasing wildfire risks. However, the insurance company will now be focusing on non-renewals in zip codes located in high fire danger areas.
State Senator Scott Wiener has expressed concerns about the stability of the insurance market following State Farm’s announcement. In response to the situation, the insurance commissioner has proposed new rules to calculate risk differently.
State regulators are also questioning the financial situation of State Farm General following the decision to discontinue thousands of insurance policies. Customers who are affected by these changes are encouraged to reach out to State Farm for more information and assistance.
Overall, the decision by State Farm highlights the challenges faced by insurance companies in California as they navigate the increasing risks associated with wildfires in the state.
