Some insurance companies are now pulling back coverage from California, which is prone to devastating flooding and wildfire.
The Hartford, which covers less than 1% of the homeowners market in California, in late January announced it will no longer offer new home insurance policies to Californian homeowners beginning Feb. 1, citing the "unique challenges" in the state's environment.
State Farm, the largest homeowner's insurance company in the United States, stopped accepting new applications for business and personal lines property and casualty insurance in California in May 2023.
Following State Farm, Allstate-the fourth-largest property and casualty insurance provider in California-also stopped selling new home, condominium, or commercial insurance policies to residents in the state. In a statement, the insurance firm claimed it is becoming too expensive to underwrite policies in California, which has seen plenty of natural disasters over the past years.
"We paused new homeowners, condo and commercial insurance policies in California last year so we can continue to protect current customers," Allstate said in a statement, as quoted by CBS News. "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 homes, and higher reinsurance premiums."
In addition, American International Group, Chubb, and Farmer's Insurance have also scaled back on the number of homeowners policies they are issuing in California.
Under California law, Insurance companies covering property in California may be required to pay for damage to the property and other buildings on it, the removal of trees and debris, and any water damage not caused by a flood. They may also be required to cover living expenses including emergency shelter, food, personal property, and valuables.
California's Devastating Natural Disasters
In 2021, California experienced over 7,300 wildfires, according to a report from the state's Department of Forestry and Fire Protection. The state saw 7,490 wildfires in 2022 and 7,127 in 2023. From 2021 to 2023, a total of 3.2 million acres of land burned due to the wildfires.
As of Monday, parts of Southern California are also facing risk of flooding due to excessive rainfall caused by an intense atmospheric river, per CNN.
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