State Farm General Insurance Company announced new limitations on their insurance offerings in the state of California, including the termination of commercial apartment policies and non-renewals of multiple different current policy holders.
The company will cease all offerings of commercial apartment policies, which insures apartment building owners, and withdraw from all current policies, roughly 42,000 across the state, with non-renewal notices. State Farm will also notify “approximately 30,000 homeowners, rental dwelling, and other property insurance policies” of non-renewal terms as well. These two groups of non-renewals account for just over 2% of all State Farm policies in the state of California.
Non-renewals will take effect starting on July 3, 2024 for residential homeowners, rental dwelling, residential community association, and business owners policies, while commercial apartment policies non-renewals will take effect beginning on August 20, 2024.
State Farm is the latest of several insurance providers to announce limits on their business in California, according to Bankrate. Farmers announced in May that it would begin restricting the number of new home insurance policies it writes in the state. AmGUARD and Falls Lake Insurance announced that they were withdrawing from the state entirely in July. USAA announced in August that it would begin limiting the number of new home insurance policies in the San Francisco area, effective in March.
California residents have been facing rising insurance costs and, in some cases, struggling to find insurance coverage, ABC reported. Christina Habib, a Rancho Cordova resident, said that when she opened her latest car insurance bill, “They were going to raise it more than double than what I was originally paying.” Her payment had increased from $136 per month to approximately $360 per month - an increase of more than $2,600 per year. "It is very hard. I depend on my car quite a bit," Habib said. In a statement to ABC, the California Department of Insurance said, “Commissioner Lara is committed to using every tool to keep insurance rates fair and affordable while improving the availability of insurance throughout the state.”
The Insurance Information Institute (III) said in a post that legal system abuses, which occur when "policyholders, plaintiff attorneys, or other third parties use fraudulent or unnecessary tactics in pursuing an insurance claim payout, increasing the time and cost of settling insurance claims,” are threatening the affordability and availability of insurance. These practices can include seeking outsized payouts and filing meritless claims, which ultimately cause higher insurance costs for policyholders.