The insurer is also withdrawing from the sale of commercial apartment policies in the state
State Farm recently announced that it will be issuing around 30,000 non-renewal notices California home insurance and rental homeowners policies.
The purpose of the decision is to ensure business sustainability in that market
According to State Farm, the decision to issue the non-renewal notices within the California home insurance market is to “ensure its long-term sustainability” there. It called the choice “difficult but necessary”.
The non-renewals will impact around 30,000 homeowners, rental homeowners, and other property owners with coverage through that company.
California home insurance customers aren’t the only ones affected
Beyond the non-renewals mentioned above, State Farm has also announced that it will no longer be selling commercial apartment policies. This means that it will not only cease the sale of that coverage in the state but will also issue non-renewals to its approximately 42,000 existing policyholders.
Renters will not be impacted
While rental homeowners and commercial apartment policies are both affected categories, renters policies will not be impacted by these changes. Tenants will still be able to proceed with coverage as usual.
Specific to California home insurance
The changes being made by State Farm are specific to this one market and will take place gradually throughout the year starting on July 3, 2024, for homeowners, rental dwelling, business owners, and residential community association policies. Commercial apartment policy non-renewals will begin rolling out on August 20, 2024.
All told, the policies affected by the changes being made by State Farm represent slightly over 2 percent of the total Californian policy count held by the company.
Making the decision
According to the insurer, the decision was taken very seriously, and was the result of “careful analysis of State Farm General’s financial health”. Its news release on the subject said that the companies finances continue to be affected by catastrophe exposure, inflation, reinsurance costs, and “the limitations of working within decades-old insurance regulations.”
It added that it was “necessary to take these actions now,” in light of the insurer’s commitment to “maintain adequate claims-paying capacity,” for its policyholders as well as to remain in compliance “with applicable financial solvency laws.”
