Getting homeowner insurance in California is about to get much tougher.
Allstate (ALL) says that it no longer sells new home, condominium or commercial insurance policies in California, the country's largest state by population, joining fellow insurer State Farm in moving at least some of its business out of the state.
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Allstate, the country's fourth-largest property and casualty insurance provider, told the New York Times that worsening climate and higher building costs have made it hard to insure properties in the state.
"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," the company said.
The Los Angeles Times reported that Allstate told the state Department of Insurance that it stopped selling new home insurance policies in the state last year. That notice was part of a request for permission to raise rates for home and business property and casualty insurance by 40%.
This is at least the third time Allstate has left California behind, according to the Times. The insurer limited homeowner insurance policies in 1994 after the major Northridge earthquake before returning shortly after. It then paused new homeowner insurance policies in 2007 for ten years before returning.
Last month, State Farm issued a statement announcing that it will stop accepting new homeowners insurance applications in California effective May 27, 2023.
The company acknowledged the states efforts to combat the wildfires that have devastated the state in recent years, but says the risk is too high to continue operating their home insurance business in the state.
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