Can We Get Some Home Insurance?
Like a good neighbor, State Farm is [leaving].
State Farm announced last week that it won’t renew policies on 30K houses and 42K apartments in California. The company cited increasing risk of natural disasters (e.g., wildfires) and outdated regulations.
State Farm’s official statement – “This decision was not made lightly and 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. State Farm General takes seriously our responsibility to maintain adequate claims-paying capacity for our customers and to comply with applicable financial solvency laws. It is necessary to take these actions now.”
State Farm was seen as the state's leading home insurance provider, and with that came the responsibility to stay open when others couldn’t. If they can’t justify the potential downside risk, who can?
State Farm’s latest action represents a concerning trend – California’s homeowner insurance costs are increasing, and there are limited options:
- State Farm announced it will increase home insurance policies by ~20 percent when your policy is up for renewal this year, per SF Chronicle
- State Farm had previously announced, effective May 27, 2023, that it would cease accepting new applications for homeowners insurance in California
- Allstate, similar to State Farm, announced last year that it would stop accepting new applications for homeowners insurance in California, citing worsening climate conditions, higher costs for repairing homes, and higher reinsurance premiums
