![California hit by another blow to home insurance California hit by another blow to home insurance](https://i3.wp.com/d.newsweek.com/en/full/2366285/california-home-wildfire.jpg?w=1200&resize=1200,0)
California’s home insurance crisis deepens as the largest private insurer, State Farm, announced it will end coverage for 72,000 homeowners starting this summer, the peak of wildfire season.
The Illinois-based insurer issued a press release Wednesday saying it would not renew policies on 30,000 homes and 42,000 condos in California, which the company said represents just over 2 percent of State Farm General’s policy count in the state.
Overall, the company accounts for one-fifth of the state’s home insurance market, meaning its decision to halt thousands of policy renewals is likely to have a dramatic impact on homebuyers across the state and the industry as a whole — especially since State Farm had already announced nine months earlier , that it will not issue new housing policies in the state.
Several private insurers have announced they will stop offering new policies or limit coverage in California, citing rising costs and falling profits as the state’s risk of more frequent and severe extreme weather events, including devastating wildfires, increases with climate change.
![House fire in California](https://d.newsweek.com/en/full/2366285/california-home-wildfire.jpg?w=1200&f=2a15df89d62c5295fe497e7340a3977e)
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Earlier this month, Texas-based private insurer American National informed the California Department of Insurance that it would stop offering homeowners insurance policies by the fall and begin sending non-renewal notices by August. Allstate and Farmers also paused new policies in the state or placed new limits on them.
“This decision was not made lightly and only after careful analysis of State Farm General’s financial condition, which continues to be impacted by inflation, catastrophe exposure, reinsurance costs and operating restrictions under decades-old underwriting provisions,” State Farm wrote in a statement released Wednesday.
“State Farm General takes seriously our responsibility to maintain adequate capacity to pay claims for our customers and to comply with applicable financial solvency laws,” the release said. “These actions need to be taken now.
Newsweek reached out to State Farm and the California Department of Insurance for comment by email Friday.
The announcement comes as California’s insurance commissioner proposes regulatory reforms to stabilize the state’s shaky home insurance market. One proposal is to give companies more flexibility to raise their premiums, which State Farm acknowledged but couldn’t change its mind about.
“We recognize the insurance commissioner’s proposed regulatory reforms, such as streamlining the rate application process, accounting for catastrophe modeling and reinsurance costs in rates, and addressing FAIR Plan vulnerabilities,” State Farm said in a statement.
“We will continue to work constructively with the California Department of Insurance, the Governor’s Office and policymakers to actively pursue these reforms to create an environment where insurance rates are better aligned with risk.”
State Farm will notify policyholders in advance of their policy expiration, the company said, and they will be given information about other coverage options.
Suddenly faced with a growing lack of options, many California homeowners had to seek a policy with the state’s insurer of last resort, FAIR Plan. The number of FAIR Plan policies has grown more than 25 percent since the end of 2022, adding to a total of more than 350,000 policies now, according to numbers reported by the San Francisco Chronicle.
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Newsweek is committed to challenging conventional wisdom and finding connections in search of common ground.