California's home insurance crisis is ongoing, as wildfires have driven big name insurance companies to stop writing new home insurance policies in the state and sent rates skyrocketing in high-risk areas.
The latest outbreak of wildfires including the Palisades and Eaton fires, underscores the crisis. Pacific Palisades was hard-hit by State Farm's decision to back out, with 69% of the company's policies there nonrenewed. Still, State Farm has already paid $1 billion in claims for those fires, and filed for an emergency rate increase of 22% to guard against the losses, although the rate increase has been denied. Chubb, meanwhile, estimates its losses at $1.5 billion, Travelers at $1.7 billion, Allstate at $1.1 billion and USAA has reported more than $1 billion in claims paid so far.
The California FAIR plan, the insurer of last resort saw an 85% increase between 2023 and 2024, Insurance Journal reports. More than 4,400 claims have been filed with the FAIR plan for the recent fires.
State Farm, Allstate, Farmers and Safeco all announced decisions to halt or slow sales of new policies in recent years, although in some good news, Farmers recently announced a return to the renters and condo market and an increase in new homeowners policies, showing signs of moving in the right direction. That might change given the huge losses being reported.
Other companies that have made similar moves include The Hartford, Tokio Marine, AIG and Chubb.
“We paused new homeowners, condo and commercial insurance policies in California last year so we can continue to protect current customers. The cost to insure new home customers in California is far higher than the price they would pay for policies due to wildfires, higher costs for repairing homes, and higher reinsurance premiums,” Brittany Nash, spokesperson for Allstate, says.
The crisis, brought on by an increase in catastrophic fires and extreme weather along with increased building costs, is hitting California hard. As rates rise and home insurance becomes harder to find, it's important to understand what's going on and what options you have as a homeowner.
