CALIFORNIA, USA — State Farm will no longer accept any form of homeowners insurance in California, citing inflation and construction costs.
The company released a statement Friday announcing they will stop taking all applications for insurance beginning Saturday.
Douglas Heller is the Director of Insurance at the Consumer Federation of America and says State Farm's decision is embarrassing.
"There's a real statewide concerted effort to address some of the challenges that are coming along with climate change, increasing our fire risk," he said. "I mean, this is the time to partner with California not walk away. And I think State Farm really has embarrassed themselves by turning their backs on the state."
While the change does not impact personal auto insurance, it prevents personal and business property owners from applying for property or casualty insurance through the company.
"State Farm General Insurance Company made this decision due to historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure, and a challenging reinsurance market," said State Farm in a press release. "It’s necessary to take these actions now to improve the company’s financial strength. We will continue to evaluate our approach based on changing market conditions."
No new applications are being accepted, but State Farm says "independent contractor agents licensed and authorized in California will continue to serve existing customers for these products and new customers for products not impacted by this decision."
The company says it will work with the state's department of insurance going forward.
The change comes months after GEICO offices abruptly closed in California late last year.