The State Farm General Insurance Company will not accept latest applications for property insurance and other policies in California, citing “historic” increases in construction costs and inflation,” the corporate said Friday.
Starting Saturday, the Illinois-based insurance group will stop to simply accept applications for business and private lines property and casualty insurance.
The move doesn’t impact personal vehicle insurance.
“State Farm General Insurance Company made this decision resulting from historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure, and a difficult reinsurance market,” the corporate said in a release. “The Department of Insurance is concentrated on the security of our homes and communities.”
The insurance company said actions are vital to enhance its financial strength.
“We take seriously our responsibility to administer risk. We recognize the Governor’s administration, legislators, and the California Department of Insurance (CDI) for his or her wildfire loss mitigation efforts,” the corporate added. “Nevertheless, it’s vital to take these actions now to enhance the corporate’s financial strength.”
Firefighters battle the Coastal fire at Coronado Pointe in Laguna Nigue on May 11, 2022.Los Angeles Times via Getty Imag
Charred objects litter the bottom beside a structure destroyed by the Fairview fire near Hemet, Calif. on Sep. 9, 2022. Los Angeles Times via Getty Imag
State Farm agents in California will proceed to serve existing customers, it said.
A spokesperson for the California Department of Insurance told Fox Business it’s committed to protecting customers.
“The aspects driving State Farm’s decision are beyond our control, including climate change, reinsurance costs affecting your complete insurance industry, and global inflation,” the spokesperson said.
California has among the costliest housing costs within the nation amid a shortage that many say has exacerbated the homeless crisis up and down the state.
The state plans to spend about $30 million to construct 1,200 small homes.
In February, State Farm halted latest coverage for some Kia, Hyundai drivers in several states since the vehicles were vulnerable to theft, it said.
