In a surprising development, insurance giant State Farm recently announced its decision to stop accepting new homeowners insurance applications in California. This move has raised concerns among homeowners and industry experts alike.  State Farm has indicated that it will honor all existing policies.  However, whether State Farm will renew existing policies remains unclear.

State Farm’s decision to halt new homeowners’ insurance applications in California stems from a combination of factors.  State Farm has cited to increasing risks associated with wildfires in the state, which have resulted in significant financial losses for insurers. Additionally, regulatory challenges and the unpredictability of natural disasters have added to the complexity of providing coverage in California.  As a result, State Farm has deemed it necessary to reevaluate its approach in order to mitigate potential future losses.

State Farm’s decision will likely cause a further constriction of an already tight California insurance market.  Buyers need to address the insurability of property as part of their due diligence process when purchasing a property.

Source: https://www.cnbc.com/2023/05/27/state-farm-to-stop-accepting-homeowners-insurance-applications-in-california.html