California's Top Insurer Cancelled Hundreds Of Policies Months Ahead Of Los Angeles Wildfire: Report
Date
1/10/2025 10:15:43 AM
(MENAFN- Live Mint) California insurer State Farm spokesperson confirmed to Newsweek that the insurer canceled hundreds of homeowners' policies last summer in the Pacific Palisades area, which is now grappling with severe wildfires.
State Farm insurance company's decision to cancel policies last summer in the Pacific Palisades area, which is now grappling with severe wildfires, has sparked concern as the blazes continue to ravage Southern California , leaving residents in desperate need of coverage as they face the aftermath of the disaster . The company defended the move, citing the increasing frequency and intensity of wildfires in the Golden State and its efforts to avoid "financial failure" due to the rising risks, Newsweek reported.
State Farm emphasized its commitment to assisting those affected, stating,“Our number one priority right now is the safety of our customers, agents and employees impacted by the fires and assisting our customers in the midst of this tragedy,” the news publication quoted a company spokesperson as saying.
The ongoing wildfire crisis has revealed a wider issue in California's property insurance market. Many private insurers have withdrawn coverage in high-risk areas, leaving homeowners scrambling for alternatives. As a result, California's FAIR Plan, which acts as the insurer of last resort, has seen its policy numbers soar. From 2020 to 2024, the number of policies issued by the FAIR Plan has more than doubled, reaching a total of 452,000, according to CapRadio, the news report stated.
The withdrawal of private insurers stems from the rising risk of wildfires coupled with regulations in the state that limit how much insurers can raise premiums to cover those risks. Faced with growing losses and higher liabilities, many companies have opted to cut coverage, triggering an ongoing property insurance crisis.
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