(Natural News) State Farm, the largest home insurance company in the United States, has announced that it will no longer accept new home insurance policy applications in California, claiming that the risk of wildfires and the cost of rebuilding was too high.
Effective May 27, State Farm General Insurance Company no longer accepts new applications, including to all business and personal lines of property and casualty cover, citing “necessary” actions to improve the company’s financial strength. (Related: When an electric vehicle crashes, even in a minor accident, insurance companies junk the entire car because its battery has to be tossed.)
“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,” said the company in a statement. “We take seriously our responsibility to manage risk. We recognize the Governor’s administration, legislators and the California Department of Insurance for their wildfire loss mitigation efforts.”
State Farm’s new policy will not impact the company’s personal auto insurance business in the state. Furthermore, independent contractor agents in California will continue to serve current customers who were already approved for property and casualty insurance with the company before the deadline, meaning they can still make claims for properties that are already covered by State Farm. The company has also stated that it will try to not issue any non-renewals in the meantime.
Inability to deal with wildfires a major economic threat to California
In 2022, there were 7,490 recorded wildfires in California, a drop of 256 from the five-year average of 7,746 fires per year. This has caused many other insurance companies to either stop or limit property insurance coverage in California, citing the ever-increasing amount of regulations and the state government’s inability to control the damage these wildfires cause.
Last year, the American International Group (AIG) notified thousands of customers in California that it was no longer renewing their insurance policies.
“It’s necessary to take these actions now to improve the company’s financial strength,” read AIG’s statement. “We will continue to evaluate our approach based on changing market conditions.”
Other insurance companies like Chubb Limited and Farmers Insurance have also canceled or dropped renewals for thousands of their own customers in the state.
This has made life that much harder for Californians, especially those living in areas vulnerable to wildfires, who are growing increasingly worried about the refusal of massive insurance companies like State Farm to sell new homeowners insurance policies.
“It would be a nightmare because our property tax is already insanely high. So, if we had a policy like some of our neighbors and friends have had, it would be like having a third mortgage,” said Michael Branson, a policyholder who described to CBS News the potential impact of losing his policy.
Continue: Naturalnews.com
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