State Farm plans to stop renewing home and apartment insurance policies in California beginning July 3.
The move, which will affect a total of 72,000 policyholders, will be done on a rolling basis and affect homeowners, rental dwelling, residential community association and business owners policies, the insurer said in a March 20 statement. On August 20, the withdrawal will start for commercial apartment policies.
Those affected by the decision will be notified before their policies expire and will be given information on other coverage options, the company said. It added that independent agents in California will continue to service policies not affected by the changes.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
State Farm, which stopped offering new homeowner policies in the state last May, cited issues related to inflation, natural disasters, reinsurance rates and “the limitation of working within decades-old insurance regulations.”
Renters insurance will not be affected, the insurer said, adding that the “difficult but necessary” decision will affect a portion of State Farm's California policyholders as follows:
- Non-renew about 30,000 homeowners, rental dwelling and other property insurance policies (residential community association and business owners). (A rental dwelling policy insures rental home owners.)
- Withdraw from offering commercial apartment policies with the non-renewal of all of those approximately 42,000 policies. (A commercial apartment policy insures apartment owners.)
“We will evaluate the need for any additional business actions as market conditions change,” State Farm said. Combined, the policies represent just over 2% of State Farm General’s policy count in the state.
The move follows those of other insurance companies leaving California, including four Kemper subsidiaries as well as Farmers Direct Property and Casualty Insurance — both of which said last November that they would withdraw from certain homeowner policy markets.
Like Florida, California has seen a number of insurers leave the market, often citing the region's growing climate-related risks and reinsurance rates. Last month, two home insurers said they were eyeing rate hikes in Florida.
In October 2023, a S&P Global Market Intelligence study found a national average spike of about 8.8% in homeowner premiums last year.
In response to the state's uptick in non-renewal notices, the California Department of Insurance recently released 10 tips for finding residential insurance. This includes a help page with links for filing consumer complaints.
RELATED CONTENT
-
What Could Derail the Economy This Year?The Letter While the outlook for the U.S. economy is mostly favorable, there are plenty of risks that bear watching.
-
How to Hire a Retirement Coach — And Why You Might Need OneA trusted retirement coach can help bring purpose, clarity and contentment to your post-working years.
-
All-You-Can-Eat Buffets: Can You Get Kicked Out for Eating Too Much?Don't plan on practicing your competitive-eating skills at an all-you-can-eat buffet. You can definitely get kicked out. Plus, don't be a jerk.
-
Do Wildfires Have You Worried About Your Insurance Coverage? Here's What to DoWith the California wildfires causing billions of dollars in damage, now is a good time to assess your homeowner's insurance and ensure it covers disasters.
-
Women, What Is Your Net Worth?Many women have no idea what their net worth is, or even how to calculate it. Many also turn to social media finfluencers for advice. Here's what to do instead.
-
Medicare’s 2025 Drug Negotiation List Includes Ozempic and WegovyThe Centers for Medicare & Medicaid Services wants to lower the cost for 15 more drugs including Ozempic and Wegovy.
-
California Wildfires and Insurance: Looking for HelpLos Angeles-based insurance expert Karl Susman shares the view from his agency’s office as all hands are on deck to help their policyholders.
-
A Strategic Way to Address the Tax-Deferred DisconnectWhat you don't know could cost you a fortune. Here's how to make the most of a tax-deferred retirement account and possibly save your heirs a bunch on taxes.
-
CPI Report Keeps the Fed on Track: What the Experts Are Saying About InflationCPI Disinflation in key areas of consumer prices should help the Federal Reserve stick to its policy path of gradual cuts to interest rates.
-
To Insure or Not to Insure: Is Life Insurance Necessary?Even if you're young and single with no dependents, you may need some life insurance. Here's how to figure out what and how much you may need.
