State Farm will no longer insure new homes in
California because of wildfire risks
FRANCISCO
GUZMAN USA TODAY
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 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 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.
Wildfires
in California in the past 3 years
In March,
federal officials announced $197 million in grants to help communities across
the country become more resilient to wildfires. Of that total, 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.
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