State Farm dropping 72K property insurance policies in California

(KRON) — State Farm Insurance is reducing the amount of homeowners insurance policies it has in California.

Those who live in high fire danger areas may soon be without homeowners or renters’ insurance. State Farm, the state’s leading insurer, has announced that over the next year it will stop renewing approximately 30,000 homeowners, renters and other property insurances policies, and not renew another 42,000 commercial apartment policies.

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These changes will start in July and August and continue rolling in over the next year.

“State Farm is the last remaining company that has not non-renewed a single homeowners insurance policy since the big fires of 2017,” said Rex Frazier with the Personal Insurance Federation of California. “As the market leader, they really held on longer than anyone else.

The Personal Insurance Federation of California which represents large auto and home insurance companies in California. Frazier said continuing to grow and paying out for wildfire damage proved unsustainable for State Farm.

“They outlined the drop in the capital that they have available to service their existing customers, and it went from $4.1 billion at the end of 2016 to $1.3 billion at the end of 2023,” Frazier said.

The zip codes that will see the most non-renewals are in areas ripe for wildfires: Santa Rosa, areas of Napa, Piedmont, Orinda and Lafayette.

Below is list by area code of where State Farm will not renew policies.

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“This is part of a larger problem,” said State Senator Scott Wiener (D-San Francisco). “We’ve had other insurers withdraw and we need to make sure that we are stabilizing our insurance market.”

State Senator Wiener is also concerned and said a change in the way rates are set could help.

“Our insurance commissioner Ricardo Lara has proposed some new rules that would allow insurance companies to calculate risk in a different way including predicting future risk around wildfires and climate change, etc.” Wiener said. “We have to do things differently when it comes to insurance in California.”

But this is raising a red flag for state regulators who say, “State Farm General’s decision today raises serious questions about its financial situation – questions the company must answer to regulators.”

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