State Farm indicates where homeowner's policies won't be renewed in San Diego: Report

Hundreds and hundreds of San Diego County property owners will have to scramble to replace — if possible — their coverage

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State Farm, California's largest homeowner's insurance provider, has indicated where it will not be renewing policies, and hundreds and hundreds of San Diego residents will be affected, according to a document provided by the California Department of Insurance.

State Farm will discontinue coverage for 72,000 houses and apartments in California starting this summer, the insurance giant said this week, nine months after announcing it would not issue new home policies in the state. Approximately 30,000 of those are homeowner policies.

The hardest hit community in the state is in Orinda, just east of Berkeley in the Bay Area, where State Farm will not be renewing 1,703 policies in the 94563 ZIP code, which represents 55% of the city's homeowner policies. That is the highest number of nonrenewals for one ZIP code in the state. The next highest is in Los Angeles.

In San Diego, the community with the greatest amount of policies not being renewed is Rancho Santa Fe, where 600 policies, more than half written for the tony community, will not be renewed. A wide swathe of communities in San Diego, not necessarily contiguous, are affected by State Farm's decision. The table below breaks out the ZIP codes that are most affected but does not come close to covering all the affected properties.

LocationZIP CodeNon-renewed PoliciesTotal PoliciesPercentage
Rancho Santa Fe92067643126051%
El Cajon919357845217.3%
East County near Crest9202113515728.8%
Uni. Hts., Normal Hts., Kensington92116708997.8
Scripps Ranch9213111018755.9%

The homeowners can only hope the governor, insurance commissioner, and state lawmakers will take action because impacted residents are sure to have a tough time finding affordable insurance elsewhere.

"This decision was not made lightly, and only after careful analysis of State Farm's financial health, which continues to be impacted by inflation, catastrophe exposure, reinsurance costs and the limitations of working within decades-old insurance regulations," the statement read.

Homeowners who live in areas at high risk of catastrophes like wildfires will have to buy into the California FAIR plan subsidized by the state. It’s expensive and offers only fire coverage.

Last month, a nonprofit research group said insurers have been losing money due to California premium limits and that for every $1 insurance companies receive in premiums in the state, $1.08 is spent on paying out claims, primarily due to wildfires.

The Insurance Information Institute says the California Department of Insurance is updating regulations that could bring more policy options at competitive prices back to the state.

"To allow insurers to better manage risk, that would mean being able to charge what is commonly known as actuarially-sound rates – something that is not occurring today," said Mark Friedlander of the Insurance Information Institute.

Friedlander says it could take a few years for the California homeowner's insurance industry to stabilize even after the new laws are enacted.

The move by State Farm comes as California’s elected insurance commissioner undertakes a yearlong overhaul of home insurance regulations aimed at calming the state’s imploding market by giving insurers more latitude to raise premiums while extracting commitments from them to extend coverage in fire-risk areas, the news group said.

The California Department of Insurance said State Farm will have to answer question from regulators about its decision to discontinue coverage.

“One of our roles as the insurance regulator is to hold insurance companies accountable for their words and deeds,” Deputy Insurance Commissioner Michael Soller said. “We need to be confident in State Farm’s strategy moving forward to live up to its obligations to its California customers.”

It was unclear whether the department would launch an investigation.

Last June, State Farm said it would stop accepting applications for all business and personal lines of property and casualty insurance, citing inflation, a challenging reinsurance market and “rapidly growing catastrophe exposure.”

The company said the newly announced cancellations account for just over 2% of its California policies. 

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