As wildfires in California have worsened in recent years, some insurers have said they're done covering the damage.
State Farm and Allstate said in 2023 and 2022 they would stop writing new policies in California due to fears of massive losses from wildfires and other natural disasters, NBC Bay Area reported. The Hartford said last year it would stop selling new fire insurance policies. Liberty Mutual said it would stop offering condo and rental insurance in 2025 and would begin dropping coverage for existing clients in 2026.
AccuWeather estimates $52 billion to $57 billion in preliminary damage and economic loss from the Los Angeles wildfires that began this week.
State Farm, California's largest insurer, has not written new homeowner policies there since May 2023. The company said last March it would drop 72,000 property polices across the state, with 30,000 of those covering homes, the Los Angeles Times reported.
The decision affected properties in some of Los Angeles' richest neighborhoods, including 1,600 homes in Pacific Palisades, one of the areas that has been hardest hit by the fires. State Farm executives blamed rate hikes approved by the state and high inflation.
"When insurance companies face higher losses or payouts, they typically respond in two ways: raise premium prices and stop renewing policies or writing new policies," Dave Jones, California's former insurance commissioner and the current director of the Center for Law, Energy & the Environment at the University of California, Berkeley, said in September. "California insurers are doing both."
In 2019, Grist.org reported that insurance companies dropped more than 340,000 California homeowners from wildfire-prone areas in just four years. Between 2015 and 2018, the 10 California counties with the most homes in flammable forests saw a 177% increase in homeowners turning to an expensive state-backed insurance program because they could not find private insurance.
A new rule set to take effect this year will require home insurers to offer coverage in areas at high risk of fire, The Associated Press reported. The rule was announced days before the Los Angeles fires broke out.
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