Like a good neighbor, State Farm is there*.
(*Except for new homeowners in California.)
The State Farm General Insurance Company has announced that it will no longer be accepting new applications for California property insurance, citing rising construction costs and increasing wildfires in the state, According to the Orange County Register.
The move won’t affect personal auto insurance or existing home policies that are still in effect, the outlet reported.
“State Farm General Insurance Company made this decision due to historical increases in construction costs outpacing inflation, rapidly growing catastrophe risk, and a challenging reinsurance market,” The company wrote in a press release“We take our responsibility to manage risk seriously. … [I]It is necessary to take these actions now to improve the financial strength of the company. “
State Farm, the largest auto and home insurer in the country by premium, owns more than 8% of California’s property and casualty policies, the Register said, citing the state’s 2021 data.
It is said to be the latest move by insurers to pull back from parts of the state where wildfires are rampant, making it more expensive for homeowners to protect their homes wall street journalHowever, the exporter said most of the withdrawals were limited to areas prone to wildfires or properties without fire protection.
California Department of Insurance Spokesperson tell fox business The reason for the company’s decision to cancel the release of the new policy in the state was “beyond our control.”
Early last year, California unveiled standards for protecting older homes from wildfires, aimed at keeping insurance costs manageable after last year’s wildfires burned some 4.2 million acres, damaged or destroyed nearly 10,500 structures and killed 30 people. Tolerable range.
These regulations include fire-rated roofs, at least five feet of defensible space around the home, and clearly defined evacuation routes. While the state already has standards for homes built before 2008, the new standards are designed to encourage insurers to offer discounts and offer incentives to retrofit older homes.
A dozen insurers, representing 40 percent of the market, offer discounts to homeowners who take steps to protect their homes, up from 7 percent three years ago.
“Reducing wildfire risk is critical to making reliable and affordable insurance available to all Californians,” he said.
— Ted Glazer
