Q: State Farm and Allstate have announced they will no longer sell new home insurance policies in California because of wildfire risks and an increase in construction costs. What does this mean for prospective homebuyers?
A: In certain high-risk areas of the state, there are very few insurance companies willing to write new policies. In some, State Farm was the last private insurance company writing policies. In those areas, the generally more-costly California FAIR plan may end up being the only property insurance available.
Q: How does this decision impact existing State Farm and Allstate policyholders?
A: State Farm and Allstate will continue to service and renew policies of existing clients in the state and offer new auto insurance policies. However, they will not be issuing any new property insurance policies for the time being in California.
Q: What will happen if more companies follow State Farm’s and Allstate’s moves?
A: There are still a wide range of companies writing policies in California. However, those willing to write new policies in higher risk areas are declining, and as stated above, with the departure of State Farm and Allstate, those in more high-risk areas may have no other option than the FAIR plan.Continue reading