Farmers Insurance Joins Allstate and State Farm in Limiting Policies in California

Farmers Insurance has become the latest company to restrict new homeowner policies in California due to soaring inflation and a surge in severe weather events, which have escalated business expenses. The decision, effective as of July 3, applies to new policies only.

This move by Farmers Insurance follows similar actions taken by Allstate and State Farm, who garnered attention in June after announcing the suspension of insurance applications for business and personal property in the state.

These decisions come in response to new insurance protections introduced by California Insurance Commissioner Ricardo Lara earlier this year. These protections, designed to enhance coverage for wildfire survivors during the summer wildfire season, include increased payouts and evacuation benefits.

In 2020, Commissioner Lara implemented a new insurance pricing regulation under the Safer from Wildfires program, which mandates insurance companies to offer discounts to policyholders who undertake safety measures such as upgrading roofs and windows to mitigate wildfire risks. The objective of this regulation is to reduce insurance costs and promote transparency in risk rating.

The collective actions of these insurance companies reflect the challenges faced by the industry in California, where climate change-related events have caused a surge in insurance claims and higher costs. As severe weather events and inflation continue to impact businesses, insurance providers are implementing measures to balance risk and maintain financial stability.