California market loses yet another homeowners insurance company

Homeowners insurance - Offered no more

The state has been struggling with a rapidly shrinking market due to considerable challenges.

California is losing yet another homeowners insurance company from its market as a company owned by the second largest home insurer in the state announces that it will be ceasing operation in the state.

This will leave tens of thousands of property owners looking to find new coverage.

Farmers Direct Property and Casualty Insurance Company, an insurer owned by the second largest homeowners insurance provider in California’s property market, has surrendered the Certificate of Authority it had been holding to allow it to operate in the state. This was revealed in a California Department of Insurance filing made in October.

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The insurer has chosen to step out of all coverage programs in the state, including home, but also renters and auto coverage. Most of the Farmers Direct policyholders will be receiving what is known as “soft-landing offers.” These letters will look similar to a renewal letter but for another company owned by Farmers, said California Deputy Insurance Commissioner Michael Soller. According to Soller’s estimates, around 2,800 policyholders who are covered by the departing insurer may not be receiving this type of letter.

The homeowners insurance company has already ceased writing coverage in California.

As of September 15, Farmers Direct was no longer writing new policies in California. It was at that time that it surrendered its Certificate of Authority, said the filing. That said, it is important to note that the insurer will continue to serve its existing policyholders until their renewal dates. Still, it has issued nonrenewal letters to those customers to let them know that they won’t be renewing with the same insurer. The letters will start to be issued on a rolling basis starting mid-December when the non-renewals begin occurring.

The majority of Farmers Direct policies in California are auto and homeowners insurance. Data from June 2023 showed that the insurer covered 57,938 auto policies and 19,778 vehicle policies.

California has been facing a rash of property insurers leaving the state or choosing not to sell new coverage there anymore due to factors such as wildfire risk and skyrocketing repair costs.

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