State Farm Insurance, California’s largest homeowner insurance provider, and one of the nation’s largest insurance provider recently announced that it will no longer offer homeowner’s insurance in California. The move comes as a result of the state’s ongoing wildfire crisis, which has caused billions of dollars in damages and forced many insurance companies to re-evaluate their policies.
The state’s fourth-largest property and casualty insurance provider, Allstate, has also recently announced it would no longer offer new policies in California saying “The cost to insure new home customers in California is far higher than the price they would pay for policies due to wildfires, higher costs for repairing home and higher reinsurance premiums.”
For homeowners in California, these announcements are a major blow. State Farm has been a reliable provider of homeowner’s insurance for many years, and its departure from the state will leave many people without coverage. This is especially concerning for those living in high-risk wildfire areas, where the threat of property damage is a constant concern.
The decision by State Farm to pull out of California is not unique. In recent years, many insurance companies have been forced to adjust their policies due to the increased risk of wildfires. The state has seen a significant increase in the number and severity of wildfires and other natural disasters in recent years, with many experts attributing the trend to climate change.
Who Will Insure?
For homeowners in high-risk areas, finding affordable and reliable insurance coverage can be a challenge. Many insurance companies have raised their rates or stopped offering coverage altogether such as State Farm and Allstate, leaving homeowners with few options. The situation is especially concerning for those who have already been impacted by wildfires. Homeowners who have lost their homes or suffered significant property damage may find it even more difficult to secure insurance coverage in the future. This could have serious implications for the long-term recovery and rebuilding efforts in affected communities. According to the New York Times, these announcements “may lead more property owners in the state to lean on the FAIR Plan, a state-offered “insurer of last resort” in high risk fire areas”.
What can be done long-term?
So, what can be done to address the issue? We believe that a multi-faceted approach is needed, one that addresses both the root causes of wildfires and the challenges faced by homeowners in securing insurance coverage. This could include measures such as increased investment in wildfire prevention and mitigation efforts, as well as policies that encourage insurance companies to offer coverage in high-risk areas. In our new book ‘Running Out of Time: Wildfires and Our Imperiled Forests’, we detail innovative solutions for better wildfire management in the US.
In the meantime, homeowners in California and other wildfire prone states, must be vigilant in protecting their homes and property from the threat of wildfires. This includes taking steps such as creating defensible space around their homes, using fire-resistant building materials, and having an evacuation plan in place. The decision by State Farm to pull out of California underscores the urgent need for action on the issue of wildfires. As climate change continues to exacerbate the problem, it is clear that a comprehensive approach is needed to protect both people and property from the devastating effects of wildfires.
Running Out of Time: Wildfires and Our Imperiled Forests is available now through the publisher, or this summer at Amazon and other retail / online outlets. Contact us to receive a notice when the books are online.