According to filings with the state Department of Insurance, the ZIP codes most affected include ones in Contra Costa County and Los Angeles County, with about 1,700 policies not renewing in the city of Orinda—which sits just east of Oakland—totaling 55 percent of State Farm policies there.
In Los Angeles County, Pacific Palisades will see more than 1,600 policies, about 69 percent of the total, not renewed.
Brentwood will also lose about 61.5 percent of policies, and nearby Bel-Air will lose 67.4 percent, according to the filings, but Hollywood Hills, Rolling Hills Estates, and Thousand Oaks will see only about 1 percent of State Farm policies not renewed.
In the March announcement, the insurance company also announced that it would stop offering commercial apartment policies altogether, which would affect 42,000 apartment owners.
The decision will begin to impact policyholders on a rolling basis beginning in July for homeowner, community association, and business owner policies, and beginning in August for commercial apartment policies, State Farm officials said.
“This decision was not made lightly and only after careful analysis of [State Farm’s] financial health, which continues to be impacted by inflation, catastrophe exposure, reinsurance costs, and the limitations of working within decades-old insurance regulations,” officials stated.
State Farm said its decision will help ensure existing policyholders’ claims can be covered by maintaining “adequate claims-paying capacity,” which is also required by law.
Ahead of the nonrenewals, State Farm said it will notify its customers before their policies expire, offering information on coverage options. But as insurers continue to pull out of the California market, more homeowners are being left without insurance and resorting to the state’s last-resort provider, the FAIR Plan.
The FAIR Plan Association saw a record number of new policies in February, officials for the plan said during a March 13 Assembly Insurance Committee meeting.
The FAIR Plan provides basic coverage when other insurers aren’t available, but premiums are usually much higher. The plan now insures about 373,000 properties, adding 15,000 in February alone—the most ever—with the plan doubling in size since September 2019, officials said during the meeting.
“We are one event away from a large assessment. There’s no other way to say it,” FAIR Plan President Victoria Roach told lawmakers during the meeting.
She said the FAIR Plan doesn’t have enough money on hand and has too much exposure to cover damages in the event of a natural disaster.
In a September 2023 statement, California Insurance Commissioner Ricardo Lara announced new rules for the industry, to be implemented by the end of 2024, which require insurers to write at least 85 percent of their policies in high-wildfire-risk and “underserved” communities, as part of what the state is calling its California Sustainable Insurance Strategy, which aims to expand insurance options in the state.
He also announced a new regulation on March 14 that would ease a restriction on insurers that prevents them from using forward-thinking models to set rates. In 1988, California passed a measure that required insurers to use data based on the past 20 years to set rates.
In the same announcement, State Farm officials said they are working with Mr. Lara’s office in hopes that insurance rates will better align with risks. They said they are aware of the regulatory reforms and are working with the Department of Insurance, Governor’s Office, and policymakers to follow through.
