State Farm No Longer Accepting Applications for Homeowners Insurance in California
State Farm blames wildfires and inflation. The California Department of Insurance is blaming…climate change.
As another glorious day dawns in California, another business entity gives up on the state.
For years, California has failed to develop and maintain its water infrastructure. It also allowed eco-activists to impose policies prohibiting brush-clearing. Decisions like these have consequences.
One of the largest insurance agencies in the country will no longer accept applications for home and business insurance in California due to wildfire risks and the cost of rebuilding.
State Farm has ceased new applications, including all business and personal lines property and casualty insurance, starting Saturday, the company announced in a press release.
Existing customers will not be affected, and the company will continue to offer auto insurance in the state, according to the release.
Construction costs in California have also escalated. This is a contributing factor to State Farm’s decision.
“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,” the insurance giant said in a statement on Friday.
“It’s necessary to take these actions now to improve the company’s financial strength,” the company added.
According to the Insurance Information Institute, State Farm was the leading company offering home insurance in California.
The decision to forgo coverage went into effect on Saturday. It applies to both personal and business properties. The company said it will continue to serve existing customers, as well as offer personal auto insurance.
The California Department of Insurance is blaming…climate change.
The California Department of Insurance said State Farm’s decision should not affect other companies.
“The factors driving State Farm’s decision are beyond our control, including climate change, reinsurance costs affecting the entire insurance industry, and global inflation,” the Department of Insurance said in a statement.
Other big players are pulling out of CA completely. Couple of factors 1) the losses are too big 2) regulation is tough. Insurnace companies are big public market investors. If you’re getting slapped in the markets and getting slapped because of payouts the business gets tough…
— Johal Capital (@johal_capital) May 28, 2023
No worries, though. Those needing insurance can use California’s FAIR plan, a state-run scheme to provide coverage to those who can’t obtain fire insurance from private insurers. Hopefully, all the rain the state recently enjoyed will keep fires to a minimum so the state’s budget deficit doesn’t expand even further.
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all the rain will actually ENCOURAGE fires. Rain makes things grow big, then it dries out, and those BIG green plants turn brown and dry.., and then there is more fodder for the wildfires.
Yup. We had unusual rainfall this winter and spring, desert full of owl clover this year, wonderful color! But we’re keeping the RV stocked for bug-out this fall because the wildfires will be intense.
I can’t imagine what moron downvoted your comment.
Everything you put forth is factual.
thank you.
I guess I’m not as nice as you are Leslie. I’d be fine with California burning to the ground (figuratively speaking), while the state goes merrily bankrupt. And the Fair plan is anything but fair to working taxpayers. Meanwhile, California blames “climate change” and “global inflation” for their mismanagement. This is like blaming “the angry Gods” or “the misaligned stars”. Hilarious
Sheesh!
How much does it cost to insure a used tent, a stolen shopping cart from CVS, and blue tarp?
I do know it’s hard to obtain a real address for those super structures, so perhaps numbering each piece of sidewalk will do. That way, State Farm will know what hovel it is insuring.
How bad is it in CA? CA just increased the wild fire mitigation bucket. A single proposed bill will nullify it and pad pockets instead. The same vicious loon who drove Tesla and its jobs out of the State now has proposed replacing the goat herds that graze in the CA foothills, along with the goat herders, be replaced by union workers. You may have seen them along major routes that traverse the South and Central Valley. Now there is no way in the world that any human being would willingly climb the CA foothills to cut and remove scrub grass in 100+degree weather as the goats do.
Instead this will be a money grab with zero results other than more grass fires and subsequently a request for a budgetary increase when it fails.
All to replace a system that gets rid of the grass, leaves fertilizer behind, and serves the dietary wants of a large community.
I guess those union workers will have names that end in “ezzz.”
Like Sanchez, Gutierrez, Jimenez, Rodriguez…
And will have families living back in Guatemala, Honduras, Columbia, Venezuela, Nicaragua, etc.
Last known address is Unk.
I think that the increase in Insurance fraud is also under pinning State Farm’s decision. They just don’t want to admit it.
It’s great to be a democrat, their policies are never at fault when things go wrong. They blame climate change, too low tax rates, systemic racism or Donald Trump, the leftist media regurgitates it and low-fo voters lap it up.
Insurance killed the light airplane manufacturing industry in the US, once strict product liability was introduced. They could easily cover traditional actual defects but not misuse and punitive awards.
At one time one of the most important industries in the world. Huge innovations in engines, fuels, plastics and glues. Destroyed in an instant by lenient trial recovery standards demanded and paid for by the Plaintiff’s bar. Camp Lejune is a redux. An absurdly easy standard of proof. Boy Scouts…. 20 years ago: “you must allow gay scouts and leaders”. Now: “Only a year more to claim sexual assault by a scout or anyone associated with the Boy Scouts of America”. No proof necessary.
I’m interested in this. Is there somewhere I can read more about it?
which part? The insurance licensing ed explains this in some detail. If you want the dirt at the carrier- it’s being spilled in insurance agency owner groups all over FB… you need to be an agency owner to get in.
If you want to see the rate proposals and rejections, the insurance commisoners post those online in most states. BORING AF to read.
no carrier covers punitive damages for any risk type.
A certain liberal arts college bent on racial justice covered by LI reporting illustrates why.
Over half if the present cost of a light aircraft is insurance. Yes, inflation… but a 172 was less than $20K in 1972 and now…. several hundred thousand dollars. A Bonanza was $45K back then. Thank you to the lawyers in and out of legislatures looking out for their bank accounts.
State Farm got tired of being a “good neighbor” in lefty insane CA, so it’s no longer there.
Another nail in the coffin.
I run a small insurance independent insurance agency on the side (I have W2 day job for the time being to help with the cost of moving across the country to escape the left coast). I started it in 2019 as a retirement career and have been plugged into the indie groups since then, so I see what goes on in crazy states like Florida which has rampant fraud among contractors with storm damage and California among others.
First off- here’s how rates work: the insurance commisioner in each state must sign off on any rate change. They don’t set the rates, but they have the power to reject. This is mostly based on preventing price wars which would cause insolvency in the underlying funds supporting claims, but CA and other states are using that veto power for social justice purposes (declaring insurance ompanies to be evil) and to drive certain insurers out of the state. I won’t name names, but I have friends who work at larger insurers and bet your ass there are deliberate and personalized wars based on “values” going on. A prime example of this is going after 2nd amendment types of coverage…. Kriedler in Wa along with Bob Ferguson put that stuff up with the Christian florists as enemies of the state. It’s happening at other levels too and trust me- the insurance commisioner offices are run by types who are very much the soviet blue hats (Kriedlers office in Wa is being sued for toxic work environment BTW).
Not placing full blame on the states though- In my experience a lot of the carriers are run by scum bags- State Farm among them. Aside from treating customers like cattle, they are fully into the DEI stuff at a corp level and I actually went really far into their recruiting pipe before cutting short and starting an indie agency.
In sofar as carriers pulling out of California, State Farm will be on a long list if the insurance commissioner denies rate hikes. Especially in the auto arena, but also due to the riot stuff- you have no idea how many freezes were put in place during the riots where you couldn’t write policies in certain zip codes for commercial property. On the forums I’ve been seeing other carriers going this direction too.
Also note that you still can’t insure Hyundai’s and Kias with a lot of carriers. I’m going through that right now with a customer I’m trying to place at Travelers.
The principal risk in many lines of business is idiotic action by government. Of course, no rational insurance company would ever cover it. Too many possibilities for catastrophe — including the possibility of government deciding such policies were immoral and demanding disgorgement of profits, with penalties and prosecution.
The absolute abuse of office here is using veto power intended ensure solvency is being hijacked for social justice purposes. I can’t speak for other states, but Kriedlers sole qualification for being elected as insurance commissioner was being a democrat.
Also note the Scott Adams (Dilbert) “because…” tool being employed.
The left will use “because racism” or “because climate change” to justify any ruling our event with this tool.
The ruled subjects have agreed to toss logic and reason out the door to vote for these leaders and the “because” factor is valid for anything the rulers want to do to the ruled.
All of the stupid decisions made by the State of Commiefornia should have consequences, they should be happy because they got what they’ve been voting for for decades.