State Farm no longer accepting homeowners insurance claims in California: NPR

Firefighters douse a burning house during the Agua Dulce Tick Fire near Santa Clarita, California in October 2019.

Mark Ralston/AFP via Getty Images

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Mark Ralston/AFP via Getty Images

Firefighters douse a burning house during the Agua Dulce Tick Fire near Santa Clarita, California in October 2019.

Mark Ralston/AFP via Getty Images

State Farm has stopped accepting homeowners insurance claims in California, citing the growing risk of disasters such as wildfires and rising rebuilding costs.

“State Farm General Insurance Company made this decision due to historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure and a challenging reinsurance market,” the giant said Friday. insurance in a press release.

“It is necessary to take these steps now to improve the financial strength of the company,” the company added.

According to the Insurance Information Institute, State Farm was the main home insurance company in California.

The decision to waive coverage came into effect on Saturday. It applies to personal and professional properties. The company said it would continue to serve existing customers and offer personal auto insurance.

The measure is the latest development in a years-long problem in California: insurance companies are abandoning homeowners due to the growing risk of wildfires.

In recent years, the state has experienced some of the most destructive wildfire seasons in its history. In 2018, Camp Fire destroyed 11,000 homes and at one point displaced nearly 50,000 people. In the aftermath, insurance companies suffered huge losses, leading to higher premiums and tougher eligibility requirements for coverage.

California authorities have tried to play down those efforts, temporarily banning insurers from dropping off customers in areas affected by wildfires and ordering insurance companies to offer discounts.

But as wildfires rage across the state, the question of insurance affordability and availability also arises. Last year, American International Group notified the state insurance regulator that it would exit the homeowners market.