Unlike a good neighbor, State Farm actually isn't always there.
The massive insurance company is dropping coverage for 72,000 homes — 30,000 houses and 42,000 apartments — in California starting this summer, the company said.
State Farm is the state's largest home insurer, and the number of coverage cuts amounts to about 2% of the homes the company covers in the state, according to the insurer.
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The decision stems from rising costs and the risks of natural disasters like wildfires, according a report by the Bay Area News Group on March 21.
"This decision was not made lightly and only after careful analysis of State Farm General's financial health, which continues to be impacted by inflation, catastrophe exposure, reinsurance costs, and the limitations of working within decades-old insurance regulations," the company wrote in a statement.
The decision to discontinue coverage by State Farm comes after the company stopped accepting new homeowners insurance applications on May 27, 2023.
State Farm then applied for an average rate hike of 38.7% with the California Department of Insurance for commercial apartments in July 2023, but was only approved for a 23% hike in the beginning of March.
State Farm isn't the only insurer facing problems with the rising costs in the state. Allstate, the fourth-largest home insurer in the state, followed State Farm's lead in June 2023 when it also stopped accepting new applicants for home insurance in California.
"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," Allstate said in a statement in June 2023.
Users on X (formerly Twitter) have already reacted to the news — with many shocked or angry about the announcement.
Am I understanding this correctly?
— Rohin Dhar (@rohindhar) March 22, 2024
State Farm dropped *every single* apartment building they cover in California?! pic.twitter.com/VE6aWHlpQS
Like a good neighbor?@StateFarm after making huge profits in California is moving out.
— Dave Weidlich 💙 (@revdavew) March 22, 2024
But somehow they can afford Super Bowl commercials?
All of this is happening as the wildfire season in California quickly approaches.
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