State Farm Decision to Stop Issuing Homeowners Insurance in California May Drive Up Premiums Transcript

Now we’re onto our next story, a live look from Dublin, where you can see the fire season outlook and you can see just the dry hills right there. Certainly it’s not getting any better and we’re going to lose that vibrant green that we have. There’s a lot of anxiety after State Farms that it will no longer ensure new customers in our state, especially with fire season on its way. Katie Nielsen talking to some homeowners living in fire prone areas now, wondering if they’ll be next to lose their insurance.

State Farm made the announcement late Friday night and said, customers who already have policies will not see those canceled, but homeowners worry this could start a trend and other insurance companies could follow suit.

At some point, what do you do? Do you say, I have to move because I can’t get insurance? I don’t know. That’s an interesting thought.

Ruth Bennett has lived in Sonoma for more than 30 years and says up until recently, homeowners insurance wasn’t an issue. Now her neighbor’s policies are being canceled and she’s worried she and her husband could be next.

We just pay our bill and keep going.

State Farm is the largest insurer in California and announced late Friday, it will not take any new applications for homeowners insurance due to quite, “rapidly growing catastrophe exposure.”

It’s more difficult than it has been in the past.

Mike Morgan is a second generation insurance agent at Gene Morgan Insurance Agency. Gene was his father. The company has been in business in Livermore for more than 70 years.

So State Farm leaving is going to cause a definite problem for insurance availability for homes in California. It’s very possible that other companies have followed suit.

He says, after the Oakland Hills fire, it became increasingly difficult and more expensive to get homeowners insurance in the Berkeley and Oakland Hills. And in the past five years since the catastrophic wildfires in Santa Rosa in 2017 and other parts of the North Bay in 2018. Other areas that don’t seem obviously fire prone are experiencing similar insurance issues. He says, it’s now harder to get policies in places like Orinda and Lafayette, parts of Walnut Creek, Concord, and Martinez, and even areas of Pleasanton and Livermore.

The potential for significant increases in premium are there. They’re real.

He says in some cases he’s seen annual homeowners insurance rates go up by as much as 400 to 800%. A problem that could get worse because less competition means even higher rates.

We would have to pay the bill, wouldn’t we? Because we want to have fire insurance, so we want to make sure that our house is covered, so we would have to pay and it could be something significant for us. Definitely.

The California Fair Plan is still an option for homeowners who cannot find insurance on the private market. But insurance experts note the fair plan only covers fire damage, so those homeowners would still have to get another policy to protect them from things like water damage or theft.

Katie, thank you. Now, we did reach out to the California Insurance Commissioner’s office for comment on State Farms announcement. In a statement, they said, “The factors driving State Farm’s decision are beyond our control while insurance companies prioritize their short term financial goals, the law…”