New Calif. homes won’t be insured by State Farm
State Farm will no longer provide home insurance to new California customers because of wildfire risks and an increase in construction costs, the company said Friday.
On Saturday, the insurance company stopped accepting new applications for business and personal lines and casualty insurance in California, the company said in a news release.
State Farm said it made this decision because of “historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure and a challenging reinsurance market,” the company said in the release.
The largest fire in California last year, the Mosquito Fire, covered over 100 square miles and put over 9,200 structures at risk. The fire destroyed more than 70 structures.
State Farm said it will continue working with the California Department of Insurance and lawmakers to build up market capacity in the state but said it’s “necessary to take these actions now to improve the company’s financial strength.”
The company said it will continue to serve existing customers.
In March, federal officials announced $197 million in grants to help communities across the country become more resilient to wildfires. Of the nearly $200 million, California received $78.9 million.
In 2021, the Dixie Fire in Northern California became the largest single wildfire in state history, burning about 1 million acres and more than 700 homes.
And in 2020, at least 36 people died, thousands were evacuated and hundreds of homes were destroyed after more than 3.4 million acres burned in California.