By WMBD TV
BLOOMINGTON – State Farm is being accused of canceling thousands of fire insurance policies in California right before the massive wildfires.
More than 10,000 homes and businesses have been destroyed as multiple wildfires continue to ravage parts of Los Angeles County, according to Los Angeles Fire Chief Kristen Crowley.
Meanwhile, social media is ablaze with accusations State Farm abandoned its California customers right before wildfires broke out, with some even calling for violence against executives.
So WMBD reached out to State Farm to get the facts. It turns out, the Bloomington-based insurance company stopped accepting new fire insurance applications in California back in May 2023.
That was almost two years ago. State Farm said the decision was driven by inflation, increasing frequency of natural disasters, and challenges in the reinsurance market, which are secondary insurers used by the company to reduce risk covering catastrophic claims like wildfires, hurricanes and tornadoes.
Then, in March 2024, State Farm announced it was not going to renew 72,000 policies in California in certain zip codes deemed too risky to continue to insure. They cited ‘ongoing financial pressures’ caused by the previous factors, along with outdated state insurance regulations as reasons for the decision.
State Farm does contact customers in advance of their policy expiration date. Many cancellation letters indicated policies were being cancelled because they “present the most substantial wildfire or fire following earthquake hazards.” One of these letters obtained by NewsNation is dated Nov. 28, 2024, just six weeks before the wildfires broke out.
WMBD reached out to State Farm to break down the numbers in Los Angeles County and received this statement:
“Our number one priority is the safety of our customers, agents and employees impacted by the fires and assisting our customers in the midst of tragedy.”
Insurance companies pulling back coverage and cancelling policies is not a new phenomenon. With ever-increasing natural disasters, insurance companies like Pekin Insurance have had to restructure to keep insurance premiums at manageable levels. Allstate Insurance in 2023 also stopped accepting new California policies.
Analysts estimate the Palisades Fire alone will cost insurance companies more than $10 billion.
California does have a state fire insurance program, California FAIR Plan, but policies often have higher premiums and less coverage than private insurers. It’s also meant to be used as a last resort.
WMBD Can be reached at News@WJBC.com.
