From State Farm to Allstate: California insurance companies who reportedly canceled policies months before raging LA wildfires

While the massive LA wildfires have destroyed huge acres of land, multiple insurance companies in California reportedly canceled their policies months ago. According to a Business Insider article published on January 9, insurers didn't just cancel the policies, they also declined signing new ones in California.

According to the outlet, the primary reason behind this step was the frequent number of wildfires in the state lately. Some of the insurance companies who have canceled their policies before the LA wildfires even started are: State Farm, Allstate, USAA, and Farmers Insurance.

In 2022, Allstate declared that they would not provide insurance for business and personal property in the state. In April 2024, however, they stated that they could resume providing policies if they could raise rates.

Similarly, in 2023, State Farm revealed that they wouldn't accept new homeowners' insurance applications in California from May the same year. The company also cited the "rapidly growing catastrophe exposure" (LA wildfires) as a reason behind this move.

In March 2024, President and CEO Denise Hardin wrote a letter to Insurance Commissioner Ricardo Lara. Hardin wrote:

"We must now take action to reduce our overall exposure to be more commensurate with the capital on hand to cover such exposure, as most insurers in California have already done..."

In 2023, a Farmers Insurance subsidiary Farmers Direct Property and Casualty Insurance, stopped offering insurance in California. They, however, then revealed that the company wasn't leaving the market completely. A spokesperson then said that this step was "an effort to strengthen our ability to serve California customers."

Another large insurer USAA also decided to take a similar step in 2023. According to an August article by The San Francisco Standard, USAA revealed that they would increase their wildfire safety demands for all new home policies.

Several other companies like Crestbrook Insurance Co., a subsidiary of Nationwide, and Hartford Insurance have also taken similar measures lately. This step taken by insurance companies has also made it quite difficult for people to get their properties covered in difficult scenarios, including the recent LA wildfires.

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State's insurance crisis had become a major problem amid the devastating LA wildfires lately

Amid the chaos caused by the damaging LA fires, people have been complaining about the insurance crisis that happened after multiple insurers stepped out of the market in California and stopped offering policies to homeowners.

A January 8 article by California Globe reported that sufficient measures to deal with frequent wildfires in California, were not undertaken by the authorities. According to 5+3 joint CapRadio and NPR investigation revealed in June 2021, Governor Newsom misled the public with certain facts.

It was claimed that Newsom ordered projects through which 90,000 acres of land were covered with wildfire prevention treatments. As per the investigation, though, data records indicated that the number was 11,399 acres.

The current LA wildfires have taken a toll on people's homes as well as businesses, causing massive damages. The Palisades fire between Malibu and Santa Monica already covered over 17,000 acres, as per CNN. Further updates about the fires are awaited.