Another Major Insurer Drops California

Allstate is among the insurance providers no longer writing new home, condo and commercial policies in California, numerous outlets reported.

"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,” Allstate spokesperson Brittany Nash said in an email to The San Francisco Chronicle.

Allstate — the state's fourth-largest property and casualty insurer as of 2021 — stopped writing the policies in 2022, according to the Chronicle, although news of the pause has only been widely reported in recent days.

The company previously stopped new homeowner policies in 2007 for 10 years in the state before eventually returning to the market, according to The New York Times.

California's largest insurer, State Farm, announced last week that it was also no longer taking on such policies.

As the Times has reported, insurance rates have skyrocketed in California in the wake of devastating wildfires during the 2017, 2018 and 2020 seasons that each became the most destructive in state history, killing nearly 200 people and causing tens of billions in damage.

While historic winter storms have quelled the drought and potentially staved off wildfires in the short term, forecasters predict California could be in for another rough fire season in the late summer and early fall.

In a news release last week, the California Department of Insurance said State Farm's temporary pause was beyond its control and noted more than 100 insurance companies still offer residential policies in the state, taking into account each home's wildfire risk score and other factors.

New reforms to the FAIR Plan — a pool of the state's insurers that provides basic fire coverage to high-risk properties unable to get traditional insurance policies — will expand coverage options later this year to keep pace with increased costs. This will raise the coverage ceiling to $20 million for businesses, homeowner associations and condos that cannot secure coverage through the normal marketplace. Homeowners who are out of options may be able to get up to $3 million in coverage.