(KRON) — In the East Bay, Orinda is one of the cities at the top of the list in terms of insured households scheduled to be dropped by State Farm this summer.
It’s not only property owners facing challenges finding coverage. This insurance crisis is impacting the real estate industry.
“I think our government has to get involved. It’s a problem people need to have insurance for their homes,” said Coldwell Banker Realtor Roberta Calderon.
Calderon is a realtor based in Orinda, a city at the top of the list of State Farm customers scheduled to be dropped this summer. Calderon is not only helping clients navigate the home insurance crisis.
“I just got a text from my neighbor the other day he is one of the many homes that’s been dropped by State Farm,” Calderon said. “I advised him to speak to a reputable broker locally and sort it out with him and get on the list for the fair plan before his termination.”
The fair plan is available to California residents and businesses in urban and rural areas who cannot obtain insurance through a regular insurance company.
“I’m not freaking out, but I’m worried you know,” said Orinda resident David Anderson.
Anderson, a State Farm customer, is also navigating home insurance coverage options.
“The broker says I’m learning about the California fair plan and let’s talk in August. That gives us enough time to look over,” Anderson said. “When you don’t really know what a solution could be whether you just have to pay more money or whether fire danger has to go down which none of us can conceive of then you get worried because it’s really out of your control.”
Anderson is not alone.
“I was not able to get it from State Farm. I was also turned down by Geico so not really sure what to do,” said Nicole, an Oakland resident.
Nicole bought a condo in Oakland last year and still searching for insurance.
“Online and everything people are just asking you know who do you have insurance with, do you have insurance,” she said. “I just don’t know for people who have single-family homes who don’t have any coverage or safety I’m not really sure what they’re supposed to do.”
Last month, State Farm, the Illinois-based company and California’s largest insurer, cited soaring costs and the increasing risk of natural disasters — like wildfires and outdated regulations — as reasons it won’t renew the policies of thousands of homes.
Back at Coldwell Banker Realty, Calderon says while deals on homes are still being made, this home insurance crisis will impact the real estate market as insurance is a key requirement to carry a mortgage for a home.
One of our roles as the insurance regulator is to hold insurance companies accountable for their words and deeds. State Farm General’s decision raises serious questions about its financial situation — questions the company must answer to regulators.
As state regulators, we deal with companies that are national and multinational in scale. To be effective for Californians, we join forces with other states so we can understand the basis for insurance companies’ decisions and how they plan to recover financially. In this particular situation, we have been working with State Farm’s home state of Illinois to get a full picture of its financial condition and plan for improvement. We need to be confident in State Farm’s strategy moving forward to live up to its obligations to its California customers.
The Department of Insurance has experts ready to assist affected State Farm customers so they have no lapse in their coverage. We urge you to contact us at 800-927-4357 or insurance.ca.gov.
We are confident our Sustainable Insurance Strategy will improve conditions for the overall market. California is on track for enacting the state’s largest insurance reform in over 30 years. In addition, our Financial Surveillance Branch continues to monitor individual insurance companies’ financial situations as we navigate this insurance crisis.
CA Department of Insurance Deputy Commissioner Michael Soller
“We have to be very aware and savvy and knowledgeable and ahead of the game,” Calderon said. “We have to make sure that the buyers are aware and get quotes before we go into contract so they know what they’re getting into.”
Meantime, the CA Department of Insurance says the agency has experts ready to assist affected State Farm customers.
FAQs
Last month, State Farm, the Illinois-based company and California's largest insurer, cited soaring costs and the increasing risk of natural disasters — like wildfires and outdated regulations — as reasons it won't renew the policies of thousands of homes.
Did State Farm announce major insurance policy change affecting tens of thousands of households? ›
State Farm announces major insurance policy change affecting tens of thousands of households: 'This decision was not made lightly' State Farm, California's largest insurance provider, announced it would not renew insurance policies for approximately 72,000 homes and apartments in the state beginning this summer.
Is it hard to get homeowners insurance after being dropped? ›
If your insurer nonrenewed or cancelled your policy because your house needs repairs or you filed too many claims, you may have difficulty finding an insurance company willing to insure your home.
Why do insurance companies cancel homeowners policies? ›
This typically happens in areas that are at a high risk of natural disasters but may also be related to other issues like high levels of litigation or fraud. “In some cases, an insurer may find that certain coverages are not financially viable,” says Renata Balasco, insurance expert and a licensed agent for The Zebra.
Why did State Farm drop me? ›
State Farm to drop thousands of California policy holders this year. California's largest home insurer, State Farm, plans to drop tens of thousands of policyholders later this year because of significant wildfire risk. Those customers will not have their policies renewed once their current contract is up.
Is State Farm Insurance pulling out of Florida? ›
WASHINGTON, D.C. (NewsNation) — Days after a major insurance provider announced it was pulling out of Florida due to environmental risks, State Farm Insurance announced Thursday it is recommitting itself to the residents of the state, NewsNation has learned.
Is State Farm dropping clients? ›
State Farm said it is dropping policies across California for financial reasons and is ending coverage in areas with wildfire hazards, among other factors.
Why does State Farm deny so many claims? ›
It's important to know some of the reasons State Farm will deny claims. They might claim that you missed a payment, have lapsed coverage, insufficient evidence, lack of medical records, lack of witnesses, that you had a previous injury, that you really aren't that hurt, etc.
Is State Farm homeowners insurance pulling out of California? ›
When will the change take effect? Starting in July 2024, State Farm will stop insuring more than 30,000 residential homes in California, and starting in August, will discontinue coverage on 42,000 commercial apartment properties.
Why are insurance companies dropping customers? ›
In addition to wildfires, insurers have cited a range of reasons for dropping customers, including “density,” which refers to either the physical closeness of homes or an insurer's exposure to risk in a given area, and the risk of fires after earthquakes — a concern that harkens back to April 18, 1906.
You can look for home insurance providers with lower rates — if these companies provide the same amount of coverage, changing home insurance providers can be a sound decision. On the other hand, you may want to reassess if a lower rate is worth the risk if it means losing certain features.
How many claims are too many for homeowners insurance? ›
How many homeowners claims is too many? Generally, if you haven't filed more than one non-catastrophic loss claim in three years, and have no liability losses in three years, you may still be eligible for coverage. Two claims in five years may drive up the cost of your coverage.
Should you keep old homeowners insurance policies? ›
Do you need to keep copies of old insurance policies? In general, if you don't have any open claims, you don't need to keep old, expired insurance policies.
Can you reinstate a cancelled home insurance policy? ›
The Bottom Line. If you receive notice that your homeowners insurance plan has been terminated, you'll need to take action. In some cases, finding a new plan should be your next step. But you may also be able to work with your insurer to fix the issue and reinstate your existing coverage.
Should you always have homeowners insurance? ›
Legally, you can own a home without homeowners insurance. However, in most cases, those who have a financial interest in your home—such as a mortgage or home equity loan holder—will require that it be insured.
Is State Farm canceling 30000 homeowners policies in California? ›
State Farm announced it will not renew approximately 30,000 homeowners' policies in California. Homeowners who live in areas at high risk of catastrophes like wildfires will have to buy into the California FAIR plan subsidized by the state. It's expensive and offers only fire coverage.
Is State Farm pulling out of Texas? ›
State Farm did not give a detailed reason for its decision, but said through a spokesman, "We must strike a balance between our exposure and our ability to pay claims." Reports the Chronicle, "A Texas Department of Insurance spokesman said State Farm has notified the agency of its intent to non-renew a portion of its ...
Is State Farm dropping 1600 homeowners policies in Pacific Palisades? ›
In Pacific Palisades, according to the letter, 69.4% of the 2,342 policyholders — or about 1,600 — will lose coverage. In Brentwood, 61.5% of State Farm's 2,114 customers there will lose their policies, or about 1,300 non-renewals.
