State Farm move to stop providing new home insurance policies in California raises concerns
SANTA CRUZ -- Californians -- especially those living in areas vulnerable to wildfires -- are growing increasingly worried about State Farm's decision to stop selling new homeowners insurance policies in the state.
The state's largest insurance provider made the announcement Friday.
"It would be a nightmare because our property tax is already insanely high. So, if we had a policy like some of our neighbors and friends have had, it would be like having a third mortgage," said policyholder Michael Branson, describing the potential impact of losing his policy.
Branson had a close call during the recent CZU wildfire, which torched the Santa Cruz and San Mateo County coasts. His family's farm was threatened by the wildfire. Branson decided not to evacuate and helped firefighters save his family's homes on the property.
"We knew it would be a nightmare dealing with insurance and the county and that it would be years before we could rebuild," he said.
State Farm cited "rapidly growing catastrophe exposure" from wildfires and other natural disasters as the reason for its policy change. Right now, its decision does not affect existing customers.
"State Farm is trying to lead an insurance industry insurrection," said Harvey Rosenfield, an attorney and founder of the advocacy group Consumer Watchdog.
Rosenfield says he believes State Farm is trying to use its leverage as the state's largest provider to convince state regulators to greenlight a rate hike.
The entire insurance industry in California will be deeply de-stabilized with terrible repercussions for policyholders and the public," he said.
He's calling on the State Insurance Commissioner Ricardo Lara to step in and order State Farm to reverse its decision.