Farmers Insurance is the latest company to limit new homeowner policies in California, saying that record-breaking inflation and severe weather events have increased business costs.
The decision went into effect on July 3, according to company officials.
“We are working diligently with the California Department of Insurance and others interested in improving the availability of property insurance in the state. With record-breaking inflation, severe weather events, and reconstruction costs continuing to climb, we are focused on serving our customers while effectively managing our business,” a company spokesperson told KTLA.
“Effective July 3, Farmers will limit new homeowners insurance policies in California to a level consistent with the volume we projected to write each month before recent market changes.”
Farmers Insurance’s decision to limit new homeowner insurance policies in California won’t impact current customers, a company spokesperson told KTLA.
The move by Farmers Insurance marks the third time an insurance company has limited its business in the Golden State. Allstate and State Farm also made headlines for similar decisions in June.
Allstate and State Farm decided to stop accepting insurance applications for all business and personal property in California.
Allstate was the state’s fourth-largest property and casualty insurance provider in 2021, while State Farm was California’s largest property insurer.
The decisions by insurance companies to limit business in the Golden State come after California Insurance Commissioner Ricardo Lara announced new insurance protections in 2021.
Lara announced new insurance protections would be in effect for the summer wildfire season, increasing payouts and evacuation benefits for wildfire survivors. The new protections would mean “larger payouts for some claims and less red tape from insurance companies,” according to Lara.
Last year, the commissioner enforced the new insurance pricing regulation under the Safer from Wildfires framework, requiring insurance companies to provide discounts to consumers who follow safety measures such as upgraded roofs and windows to prevent wildfire risks.
The new regulation aims to reduce insurance costs and create consumer risk rating transparency.