These California Insurers Cut Policies Before Devastating Wildfires

Several property insurers in California cut coverage or stopped offering new homeowners policies in the past few years, as companies tried to limit losses amid the risk of paying enormous claims due to wildfires.

That left Golden State homeowners scrambling to find insurance at a time when they faced the likely prospect of losing everything should a particularly bad blaze, such as the ones currently burning through Southern California at the moment, come along.

Newsweek contacted insurers Travelers, USAA, and Chubb for comment by email on Thursday morning, outside of standard working hours.

Why It Matters

While California has always been vulnerable to devastating wildfires, they have become more frequent and severe in recent years as global temperatures have increased. People living in areas that traditionally wouldn't have seen fires, such as Southern California, are now seeing their communities go up in flames.

Faced with the growing likelihood of paying billions in damage claims every year and unable to raise premiums as much as they'd like to because of the state's regulations, insurers have been cutting coverage and canceling policies across California—especially in the most at-risk zones.

This has triggered an ongoing crisis in the Golden State's property insurance sector, which could be exacerbated by the current wildfires.

What To Know

According to the California Department of Insurance (CDI), seven out of 12 of the Golden State's top insurers—the ones with the biggest market share—cut coverage in the state over the past four years.

As a result, California's FAIR Plan, which offers fire insurance to those who can't find it in the traditional market, "is becoming the insurer of first resort, not last resort, for many," the department wrote. Currently, the FAIR Plan has a 3 percent market share in the state.

What Companies Have Cut Coverage In California Since 2022?

Here's a list of insurers who have canceled or cut their coverage in the past four years.

State Farm

State Farm, which has the biggest market share in the state, announced in 2023 that it was stopping the acceptance of new homeowners insurance applications in California due to increased costs. The announcement came as the company implemented a 20 percent increase in premiums for existing customers.

In April 2024, State Farm announced that it would cancel 72,000 policies in the state by the summer, including 30,000 home policies and 42,000 commercial apartment policies. Of these, 1,600 were insured homes in Pacific Palisades, the affluent neighborhood struck by the Palisades fire.

In a statement to Newsweek, a spokesperson for State Farm said Wednesday: "Our number one priority right now is the safety of our customers, agents and employees impacted by the fires and assisting our customers in the midst of this tragedy."

Travelers

Also last year, Travelers said it was limiting new policies in the state. It did so at the same time as announcing it was increasing its rates for existing customers by an average of 15 percent. The premium hike affected more than 329,000 homeowners as of June 24.

Tokio Marine Holdings

Tokio Marine Holdings announced in April 2023 that they were not going to renew a total of 12,556 homeowners policies as of July 1. The total premium value of these policies was $11.3 million, according to filings to the CDI.

Nationwide

In December 2023, Crestbrook Insurance Co., a subsidiary of Nationwide, stopped writing new homeowners policies in the state. In February 2024, it said it will stop renewing all home insurance policies in the state by June 15, 2025.

In a statement to Newsweek, a spokesperson for Nationwide said: "Destruction caused by the southern California wildfires is heartbreaking and we are here for our impacted customers in the area to help them with their recovery. Nationwide has and continues to offer standard homeowner policies in California. In 2024, we discontinued underwriting property policies through Crestbrook Insurance Co., which was a small portion of our overall business."

Farmers

Also in 2023, Farmers—which has the second-biggest market share in California—capped the number of new homeowners policies to 7,000 per month, and paused writing policies for condo and renters insurance. Last year, it said it was committed to increasing the number of new homeowners policies per month to 9,500 and it was bringing back condo and renters insurance.

A spokesperson for Farmers told Newsweek: "We are currently focused on assisting customers who are impacted by the devastating fires and strong winds affecting Southern California. Our specially trained Farmers Catastrophe Response Team members have already begun to provide assistance to customers and we are urging local residents to remain vigilant. The information found in our December 11, 2024, release about increasing coverage availability in California remains accurate."

USAA

In 2023, four United Services Automobile Association (USAA) companies announced plans to sign new homeowners policies only for homes that have a wildfire risk score of 1 on a scale of 32 as of March 2024.

Allstate

In 2022, Allstate temporarily stopped offering new policies in the Golden State due to the increased wildfire risk and growing costs. Last year, the company issued a statement saying it might start offering new policies in California should the state's authorities implement some changes to "fully reflect the cost of providing protection to consumers."

A spokesperson for Allstate told Newsweek: "Right now, we're focused on helping our customers recover and rebuild their lives. We're supporting customers who have filed claims and have teams ready to move into California once it's safe to help on site. Allstate policyholders affected by the wildfires can file their claim through the Allstate® Mobile app, online, by calling 1-800-54-STORM, or their local agent. We're here for our customers."

Chubb

Also in 2022, Chubb stopped writing high-value homes with high wildfire risk and stopped renewing policies for some high-value homes.

What People Are Saying

A 2023 statement from Allstate reported by the New York Times read: "We paused new homeowners, condo and commercial insurance policies in California last year so we can continue to protect current customers. The cost to insure new home customers in California is far higher than the price they would pay for policies due to wildfires, higher costs for repairing homes and higher reinsurance premiums."

An ER nurse in Hastings Ranch, California, interviewed by ABC 7 on Wednesday said: "I know I'm not supposed to be here, but this is my parents' home. They just got canceled from their fire insurance. So they're dealing with this [...] They're 90 years old. They've lived in this house for 75 years. They've had the same insurance, and these insurance people decided to cancel their fire. And we're going through this. And it just happened. And they have no fire insurance. Thank you California insurance companies for supporting residents who pay taxes and love California. They wonder why people leave California."

What Happens Next

Multiple fires were still burning through Southern California as of Thursday early morning, at the time of this article's publication. The two largest fires, Palisades and Eaton, have destroyed at least 2,000 structures in Los Angeles County, making the blazes some of the most destructive to ever hit the city. Palisades alone, according to the California Department of Forestry and Fire Protection (Cal Fire), has burned through more than 17,200 acres since it started on Tuesday morning.

Residents who have not managed to find fire coverage after being dropped by their previous companies might have to shoulder the burden of hundreds of thousands of dollars in damages—all on their own.

Have You Been Affected?

If you're a Southern California resident who's been affected by an insurer's decision to cut coverage in the state over the past four years, please get in touch by emailing g.carbonaro@newsweek.com.

Update 1/10/25, 11:20 a.m. ET: This article has been updated with comments from Allstate, Farmers and Nationwide.

Correction 1/10/25, 11:20 a.m. ET: This article was corrected to say that Tokio Marine Holdings' announcement came in April 2023.