SORRY! Your Cities Are Collapsing So Your Home Insurance Has Been Canceled!
California's biggest home insurance provider, State Farm, has announced that it will be discontinuing coverage for tens of thousands of policies in the state this summer in a move that many are interpreting as a strong sign that the insurance industry suspects something big is about to go down there.
On March 20, State Farm announced that 72,000 home and apartment policies in California will be cut, citing issues such as the increasing risk of catastrophes, regulatory costs and ongoing inflation. The move is a major blow to California homeowners, who are already grappling with insufficient policy coverage and high insurance rates.
In their announcement, the company said that the homeowners insurance policies for 30,000 customers, including condominium owners, will not be renewed. They also will be putting an end to offering commercial apartment policies and will not renew the 42,000 that they currently have in place. The cancellations will begin this summer, with homeowners insurance cancellations starting on July 3, followed by commercial property policy cancellations on August 20.
In a statement, State Farm said that they did not make the decision lightly. They added that they take “seriously our responsibility to maintain adequate claims-paying capacity for our customers and to comply with applicable financial solvency laws. It is necessary to take these actions now.”
Last year, State Farm announced that it would not be accepting any new home insurance applications in the state because of “historic” rises in inflation and construction costs. This was followed by a rate hike for 20 percent of its existing customers. Seven of California's 12 biggest insurance groups have been either restricting or pausing new homeowners insurance policies during the last year.
Although the increasing prevalence of arson is undoubtedly a factor in California's insurance problem, other crime is also a growing issue, especially in liberal-run cities like San Francisco and Los Angeles. Many analysts believe that home break-ins are also playing a role in State Farm's decision.
Consumer Watchdog Executive Director Carmen Balber said: “It's an outrage that State Farm is dumping so many customers that have paid their premiums diligently for decades with the expectation that their home insurance will be there when they need it."
