Two of the country’s largest insurance companies are no longer writing new home insurance policies in California.
Allstate and State Farm both announced in the last week that they would be halting insurance policies citing inflation and natural disasters in the state.
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“We paused new homeowners, condo and commercial insurance policies in California last year so we can continue to protect current customers,” Allstate said in a statement. “The cost to insure new home customers in California is far higher than the price they would pay for policies due to wildfires, higher costs for repairing homes and higher reinsurance premiums.”
State Farm made a similar announcement last week, saying the changes were necessary to improve the company’s financial strength.
“State Farm General Insurance Company made this decision due to historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure, and a challenging reinsurance market,” the statement said.
CNN reported that the state’s wildfire risk played a factor.
“California has seen an average of more than 7,000 wildfires each year, consuming an average of over 2 million acres, over the past five years, according to data from the governor’s office. Scientists and California authorities blame the climate crisis for the intensity of the fire seasons,” CNN reported.
Both Allstate and State Farm said current policy holders would not be impacted by the changes.
Several other companies are limiting new policies, but Californians still have a choice of about 100 other insurance companies.