In a move that sent shockwaves through the Golden State, State Farm, California's leading home insurance provider, recently announced its plan to drop coverage for a staggering 72,000 homes and apartment policies starting this summer.
The impact of this decision will be felt by approximately 30,000 home policyholders and 42,000 commercial apartment policyholders, representing just over 2% of State Farm's general policy count in California.
State Farm itself announced last year that it would stop accepting new home insurance applications in California due to "Historic" increases in construction costs and inflation.
State Farm is not alone in its decision to step back from the California market.
Insurance giant AllState also paused its sales of new home insurance policies in 2022 due to wildfires and higher costs of doing business in the state.
According to KCRA, seven of the 12 largest insurance groups in California have either paused or restricted new homeowner policies in the past year.
As private insurance companies refuse to issue new policies to homeowners with sky-high premiums and in "Risky areas," many Californians are turning to state-run insurance programs like the "FAIR Plan." However, even this option, deemed the state's "Insurer of last resort" comes with a hefty price tag.
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