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What State Farm’s temporary pause on new homeowners’ policies means for California

On Behalf of | Jun 20, 2023 | Insurance Law

The impact of climate change continues to grow over time, and California’s homeowners are paying the price – literally. Recent temperature increases have significantly raised the risk of wildfires in the state. In fact, California’s two largest fires by area burned occurred back-to-back in 2020 and 2021. The insured losses from these two disaster events reached tens of billions of dollars.

Heavy losses from wildfires have forced insurance carriers doing business in the state to reevaluate. The latest insurer to make this difficult decision was State Farm General Insurance Company. Last week, the insurer announced that it was momentarily putting a pause on writing new homeowners and commercial insurance policies in California.

State Farm’s insurance sale pause comes as California’s summer season fast approaches. The state’s wildfire season also falls within the summer period.

While the pause means homeowners can’t buy new policies with State Farm, how does it affect those who are currently policyholders with the carrier?

How the pause affects current policyholders

Homeowners who are currently policyholders with State Farm are unaffected by the new policy pause. The California Department of Insurance (CDI) gave assurances that no nonrenewals are happening with the announcement. State Farm will also continue to write policies for private auto insurance in the state.

Insurance lawsuits still allowed

Even if insurers like State Farm have their misgivings about wildfires, homeowners can still file lawsuits if they think their insurers unfairly denied or underpaid their claims. But because insurance disputes can be tricky, especially when it comes to interpreting provisions and exclusions of a policy, homeowners are going to need an expert to guide them. They might want to hire an insurance lawyer who can offer advice and representation if the dispute is taken to court.