California residents can no longer submit applications for home and business insurance to State Farm.
The new policy went into effect May 27, but it does not impact personal car insurance. The company will continue to service existing clients for their home and business insurance. This means clients can make claims on property already covered by their insurance.
“State Farm General Insurance Company made this decision due to historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure, and a challenging reinsurance market,” State Farm said in a press release. “It’s necessary to take these actions now to improve the company’s financial strength. We will continue to evaluate our approach based on changing market conditions.”
In 2021, State Farm was the largest insurance provider in California collecting over $7.2 billion in premiums, but the company suffered a loss of $4 billion.
In addition to covering repairs made to personal property, insurance companies may also be required to cover living expenses for those displaced, according to the California Department of Insurance.
Wildfire firefighting agencies responded to 7,396 fires that burned 2,569,386 acres in California in 2021.
“We recognize the Governor’s administration, legislators, and the California Department of Insurance (CDI) for their wildfire loss mitigation efforts,” the statement read. “We pledge to work constructively with the CDI and policymakers to help build market capacity in California. However, it’s necessary to take these actions now to improve the company’s financial strength.”
State Farm is not the first to end home insurance coverage in California. In 2022, American International Group notified its 9,000 clients in California that they would not be renewing their home insurance, the Washington Post reported.
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