State Farm Ends Coverage for Over 72,000 Homes Due to Rising Costs and Risks

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State Farm’s March announcement to terminate insurance coverage for about 30,000 homes and 42,000 apartments surprised many. Citing increased costs, growing disaster risks like wildfires, and outdated regulations, the company explained its decision.

Policy expirations will happen gradually until 2025, starting with homeowner, rental dwelling, and business owner policies in July, followed by commercial apartment policies in August.

State Farm’s decision reflects financial concerns including inflation and reinsurance costs. This move follows a previous halt in issuing new policies in California, signaling profitability challenges.

The termination leaves homeowners and apartment owners scrambling for alternatives. In California, some may turn to the Fair Access to Insurance Requirements (FAIR) plan, though it offers pricier and less comprehensive coverage. This trend reflects the broader challenges posed by natural disasters, with FAIR plan policy counts doubling over the last five years.