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
-
Berkshire Hathaway's in the 100,000% Return Club. No Surprise HereWarren Buffett's fascination with the insurance industry has helped Berkshire Hathaway's stock return snowball.
-
4 Turnaround Stocks to Consider – and 2 More to Keep an Eye OnA turnaround stock is a struggling company with a strong makeover plan that can pay off for intrepid investors.
-
Facing a Layoff? Ask Your Employer These Questions NowIf you're being laid off or forced into early retirement, don't make any decisions without proper guidance — and that starts by asking some key questions.
-
How to Fly Private Without Breaking the BankLuxury travel, redefined—discover how to fly private for less.
-
I Thought St. Patrick’s Day Was the Best Time to Visit Ireland — Then I Went in MayExplore Ireland with confidence: Essential travel tips, currency insights and must-visit destinations.
-
5 of the Best Places to Celebrate St. Patrick's DayWe take a look at some of the most popular destinations to celebrate St. Patrick’s Day. Did your favorite make the list?
-
These Four Books Explore How to Leverage Our Outrage PositivelyThe authors offer some powerful tools to help us find solutions to discord rather than remaining silent or blowing up in anger.
-
Financial Pitfalls to Avoid in Your 30s, 40s and 50sAs you pass through each decade of working life and build wealth for retirement, watch out for the financial traps that can hinder your progress.
-
Trump's Tariffs Could Spike Gas Prices: Here’s How to SavePresident Donald Trump's tariffs against Canada could lead to higher prices at the pump. Here are ways to save.
-
Borrowing Against Your Life Insurance: How It Works and What to ConsiderUnlock quick access to cash by borrowing against your life insurance policy — without credit checks or strict repayment terms.
