NORTHERN CALIFORNIA, Calif. – After State Farm announced it would not offer new property insurance in the state of California at the end of May, Allstate is now following suit.
Neither company is accepting new applications for property or casualty insurance in the state due to the increased risk of wildfires.
State Farm specifically cited “rapidly growing catastrophe exposure” and “historic” construction costs.
The change will not impact existing policyholders, but it’s a huge hit to the nation’s most populous state.
State Farm and Allstate make up its first and fourth-largest property insurance providers respectively.
“If you can’t insure your home, you can’t sell it number one, so when people go to get insurance, the premiums are so high that it makes it not affordable,” California State Senator Brian Dahle explained. “So, we’ve seen people not able to sell their homes, you can’t get a loan against the home, so that has been very devastating to some folks.”
Senator Dahle believes more insurers could follow the two insurance giants because of California’s insurance cap, which prevents insurance companies from raising their rates.
According to the California Department of Insurance, this isn’t the first time this has happened.
They released a statement saying in part:
“Historically, the Department of Insurance has seen companies pause and then re-start writing policies as conditions change. More than 115 insurance companies currently offer California homeowners’ insurance.”
Here in the Rogue Valley, Joe Hubbard with Protectors Insurance said that premiums are already increasing because of past wildfires.
“After the Almeda Fire, we saw the value of homes going up because of inflation, we saw people were seeing premium increases just because the value was going up,” Hubbard said.
Hubbard estimated there have already been around ten companies that have gotten out of the property insurance business here in Oregon.
For prospective homeowners, he said that it’s now vital to check in with insurance before making that big purchase.
“Before you buy a home, I would definitely check with an insurance agent to see what that homeowners’ [insurance] would cost,” Hubbard recommended. “In the past, that was kind of a second issue, but now, I think before you sign a deal, make sure you can get a policy.”
State Farm said that it will continue to evaluate the market over time, indicating that its policy could change in the future.
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