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State Farm Pulls the Plug on 72,000 Policies in California
March 22, 2024
State Farm, one of California’s major home insurance providers, has dropped a bombshell announcement: It is cutting ties with 72,000 homes and apartments across the state. The move is set to kick in this summer, leaving many homeowners in the lurch.
Blaming inflation, regulatory expenses, and the escalating risks from natural disasters, State Farm justified its decision to shrink its footprint in the Golden State but said the move “was not made lightly.” In a statement on March 20, the insurer emphasized its concern for financial stability and compliance with outdated regulations.
The axe falls heavily on 30,000 home policies and 42,000 commercial apartment policies, amounting to just over 2% of its overall policies in the state. It’s a sizable chunk, leaving many wondering where to turn for coverage.
This isn’t the first time California property owners have been left high and dry. Last year, State Farm stopped accepting new home insurance applications due to soaring construction costs and inflation. Then, it slapped existing customers with a hefty 20% rate hike, according to reports.
But State Farm isn’t alone in its retreat. Allstate, another insurance titan, hit pause on new home insurance policies in California in 2022, citing wildfires and the rising cost of doing business. And it’s not just the big players; smaller companies are also fleeing the scene due to mounting expenses.
With private insurers turning their backs on high-risk areas, homeowners are left with few options. Many are forced into the arms of state-run programs like the “FAIR Plan,” California’s last-resort insurer, according to The Sacramento Bee. But even there, premiums are sky high, spelling trouble for already-stretched budgets.
The insurance exodus isn’t just a headache for policyholders; it’s a symptom of deeper issues plaguing the state. With wildfires raging and costs soaring, California’s insurance landscape is looking increasingly bleak. And for the thousands left scrambling for coverage, the future remains uncertain.
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