SANTA RONDA, Calif. (KGO), -- One of the nation's largest insurance companies made a big announcement over the holiday weekend. State Farm announced that it will stop insuring new homes and businesses in California as of Saturday due to the high wildfire risks and increased construction costs.
Lisa Frazee is familiar with the slogan "Like a neighbor, State Farm will be there," but wonders if it is true after the company announced that they would no longer insure homes and properties built in California because of wildfire risks and rebuilding costs.
Existing State Farm clients, like Lisa, will not be affected. She and her family spent the last few years rebuilding their Santa Rosa home, which they lost in the 2017 Tubbs Fire. The house is now finished. Lisa is worried about other people moving into the area and looking to insure homes or businesses.
Frazee said, "Insurance should be used when things go wrong. Fire is a bad thing. If you want insurance in California, I think you should insure everyone there."
State Farm made this decision because of the historic increase in construction costs that outpaced inflation, a rapidly growing catastrophe exposure, and a challenging market for reinsurance... it is necessary to take these steps now to improve State Farm's financial strength."
California has seen record wildfires over the last six years. State Farm is now the second insurance company that has stopped offering coverage because of wildfires. AIG informed thousands of Californians that their policies would no longer be renewed last year. State Farm is no longer accepting new clients, so the real question now is where people in high-risk areas can get insurance.
