How State Farm’s decision to stop new homeowner policies impacts a North County community
By Zara Barker,2023-05-30
SAN DIEGO — State Farm announced it will no longer write new homeowner insurance policies in California . The company also banned casualty and business property insurance, but the decision does not impact auto insurance.
The insurance company said the decision was necessary to improve their financial strength and because of: rapidly growing catastrophe exposure, historic increases in construction costs outpacing inflation and a challenging reinsurance market.
The announcement hit some residents in San Elijo Hills, a community within San Marcos, extra hard. Residents say their community has been known to have a more difficult time obtaining homeowner insurance because of the landscape they live in.
“I was so disappointed,” San Elijo Hills resident and Realtor Stephanie Cowan said about when she heard the news from State Farm. “As a local homeowner, I have seen our choices shrink and the rates go up. In the last seven years since I’ve owned my current home, it has nearly tripled in the rate.”
“San Elijo Hills is an amazing master plan community,” Cowan said. “We are surrounded by 18 miles of hiking and biking trails, so that’s a great appeal, but it also can make it more difficult with insurance if you’re backing to canyonland.”
She said it seems Southern California residents are now paying the price for fires in Northern California and a blanket ban for the Golden State seems unfair.
“We have been paying the price for fires in other areas, like in Northern California, which unfortunately they did suffer losses, but I don’t think it’s fair that we are going to be paying even more,” Cowan said.
“They had to give out a lot of money, I do understand where they are coming from,” Brandee Remnek said. But she says she wishes insurance companies would look at each home individually to determine the risk instead of banning everyone.
Brandee and Matthew Remnek have lived in San Elijo Hills for about 20 years and were insured through Ameriprise, until the company notified them a little more than a year ago that they had a month to find new coverage because they were dropping their policy due to wildfire risks. The Remneks were able to obtain coverage through State Farm but are now concerned they could be dropped from them soon, too.
Cowan said she often told her real estate clients about State Farm’s homeowner insurance policies because it was well-known in San Elijo Hills as a company that insured homes in the area. Now, she said she will need to find another reputable company to offer as an option to her clients. She said the state offers a private insurance association, the California Fair Plan, which provides basic fire insurance coverage for high-risk properties when other companies won’t insure them, but she said it can be costly.
“There still is an option for people when they cant get insurance from another carrier, and that is the California Fair Plan,” Cowan said. “It’s great the government has a plan in place if you’re absolutely rejected by every carrier, but that just covers your fire and then you have to get another policy for theft and personal property, so it just ends up being more expensive.”
State Farm issued the following statement to FOX 5:
“We take seriously our responsibility to manage risk. We recognize the Governor’s administration, legislators, and the California Department of Insurance (CDI) for their wildfire loss mitigation efforts. We pledge to work constructively with the CDI and policymakers to help build market capacity in California. However, it’s necessary to take these actions now to improve the company’s financial strength. We will continue to evaluate our approach based on changing market conditions.”Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.