This strikes me as a story worth more attention than it’s receiving. State Farm Insurance, which writes more homeowners insurance policies than any other company in California (it’s also the largest in the U. S.), has announced it will accept no new homeowners insurance policies. Ashley Capoot reports at CNBC:
State Farm General Insurance Company on Friday announced that it will stop accepting new homeowners insurance applications in California, citing “rapidly growing†catastrophe risks like wildfires, “historic increases†in construction costs and a challenging reinsurance market.
“We take seriously our responsibility to manage risk,†the company said in a release.
State Farm said it will stop accepting new business, personal lines property and casualty insurance applications starting Saturday. The new policy will not impact personal auto insurance, according to the release. State Farm’s independent contractor agents will also continue to serve existing customers.
This move has some serious implications including probably increasing the cost of homeowners insurance in the Golden State and discouraging selling your home to upgrade or downgrade.
Figured this would happen eventually. Too much building in fire prone areas. I think we will see this accelerate in Florida and along the southern coasts also where we have too much building in flood prone/hurricane damage areas. That has been offset by federal flood insurance. Is there a reason we dont have federal fire insurance, or maybe we do?
Steve
Here in CA all our properties are insured with State Farm, with only one being in a rural area subject to fires. Insurance premiums, before this, have been going thru the roof in areas susceptible to fires. Friends of ours, in some cases, couldn’t afford them, so had already dropped their policies before this latest directive from State Farm. My husband predicts such a directive will spread to other insurance companies in this state, as well.
Generally, various kinds of housing insurance are required by mortgage companies. People who drop their fire insurance might be in violation of their mortgage contracts.
A bigger problem for home owners is that California is losing population, a net of 500,000 between April, 2020, and July, 2022. This is a middle class efflux, so it must eventually affect housing prices. Illinois had a larger percentage loss, as did Louisiana and New York.
Businesses are also leaving, especially San Francisco. Union Square, once an elegant shopping center, has lots of empty space. A number of tech companies have left the region, too.
Evidently, the California Dream is over, unless you are a Second or Third World immigrant.
Where are you, Jan Smithers?