State Farm ends new applications in California for property insurance, other policies

Business

By Louis Casiano, Fox News

May 27, 2023 | 03:03

State Farm General Insurance Company will no longer accept new applications for property insurance and other policies in California, citing “historic”[ads1]; increases in construction costs and inflation, the company said Friday.

Starting Saturday, the Illinois-based insurance group will stop accepting applications for property and casualty insurance on commercial and residential properties.

The move does not affect personal vehicle insurance.

“State Farm General Insurance Company made this decision due to historic increases in construction costs that exceed inflation, rapidly growing catastrophe exposure and a challenging reinsurance market,” the company said in a release. “The Department of Insurance is focused on the safety of our homes and communities.”

The insurer said actions are necessary to improve its financial strength.

“We take our responsibility for managing risk seriously. We recognize the governor’s administration, lawmakers and the California Department of Insurance (CDI) for their efforts to reduce wildfire losses,” the company added. “However, taking these actions now is necessary to improve the company’s financial strength.”

State Farm agents in California will continue to serve existing customers, it said.

A spokesperson for the California Department of Insurance told Fox Business it is committed to protecting customers.

“The factors driving State Farm’s decision are beyond our control, including climate change, reinsurance costs affecting the entire insurance industry and global inflation,” the spokesperson said.

California has some of the most expensive housing costs in the nation, amid a shortage that many say has exacerbated the homeless crisis up and down the state.

The state plans to spend about $30 million to build 1,200 small homes.

In February, State Farm suspended new coverage for some Kia, Hyundai drivers in several states because the vehicles were vulnerable to theft, it said.