Immediately after State Farm’s exit from selling in the market, its top competitor has done the same.
Allstate has announced that it is no longer selling new California home insurance policies, removing it from the pool of available coverage for homeowners following State Farm’s exit from sales only days before. That said, despite the fact that the announcement was only just made, the insurer’s statement said it stopped accepting new policies as of last year.
This means that two of the largest insurers in the country are no longer selling in the state.
Allstate is the fourth largest property and casualty insurer in the state. It has announced that it has ceased selling new California home insurance as well as commercial and condominium policies. Similar to State Farm, Allstate also cited more frequent and damaging wildfires and other natural disasters associated with climate change, as well as skyrocketing building costs.
Both insurers have stated that these two factors have made it exceptionally challenging to continue operations within the most populous state in the country. The rising catastrophe exposure in the state has meant that those seeking coverage will need to look for alternative insurers than those two major players.
Allstate put its California home insurance policy sales on hold starting in 2022, and now they’ve stopped.
In the case of both Allstate and State Farm, existing policyholders will continue to have their coverage. The insurers are not exiting the state or cancelling existing policies. That said, neither one is accepting applications to cover new customers.
“We paused new homeowners, condo and commercial insurance policies in California last year so we can continue to protect current customers,” said the insurer in a recent statement emailed to media outlets. “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.”
California home insurance has already been a struggle to find for many residents and businesses in the state due to the record-breaking wildfires and mudslides in recent years. The withdrawal from sales of these two major players will only make this challenge all the more difficult.
In Conclusion
The withdrawal of Allstate and State Farm from the sale of homeowners insurance policies in California has created a challenging situation for residents and businesses seeking coverage. With the increasing frequency of natural disasters and rising building costs impacting the state, finding alternative insurers is now more important than ever. Existing policyholders of both insurers will still have coverage, but new customers will have to look elsewhere for coverage. The decision by Allstate and State Farm underscores the need for all Californians to ensure they have adequate coverage and explore their options for homeowners insurance policies.
