Insurance companies are leaving California. Here’s why.

Recently, two major insurance companies have officially retired from California’s Home Insurance Marketplace. This past summer, State Farm assessed the growing inflation rates and natural disaster occurrence in the Sunshine State and decided to cease accepting applications for dwelling casualty insurance. Factors such as: rising construction costs, challenging reinsurance market, and wildfire risks were all mentioned throughout State Farm’s resignation statement. This recent change, however, will not affect auto insurance.

AllState Insurance, has taken a similar step. Deciding to temporarily pause all business, homeowners, and condo incoming applications, the insurance giant wants to “protect current customers” because of the rising cost of remodeling homes, and high reinsurance premiums. AllState will impose this measure on November 2023.

This new course of action, unfortunately, is not exclusive to California. Limiting insurance application intake is currently happening to other states such as Florida and Louisiana where climate change has played a cardinal role in rising temperatures and unstabilizing weather conditions, causing heavy winds and, therefore, spreading wildfires along these states.

Consumers are leaning towards the California Fair Plan—a government created insurance fund incharge of providing basic fire coverage. This provides an affordable coverage for homeowners when insurance companies turn away from them.

Good news is that at Griffith Insurance, we offer you assistance on which route to go when choosing an effective insurance policy despite today’s skewed market.