Wildfires and expensive rebuilding wiped out profits among California home insurers. State Farm isn’t the first insurer to retreat from the state, and may not be the last.
, American International Group let thousands of customers know their home insurance policies would not be renewed, and Chubb, a high-end insurer, said it would continue to non-renew some of its customers.
State Farm in a press release blamed high construction costs that make it extra expensive to rebuild after a home is destroyed in California, growing natural disaster risk — particularly from wildfires — and “a challenging reinsurance market.” “We have very inexpensive home insurance in California,” compared to other states, said Michal Wara, a lawyer and climate scholar at Stanford Law School. “But the thing is, five years ago, we realized ‘oh yeah, actually in California you can burn down 50,000 houses overnight.’”
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