California homeowners will no longer be in the “good hands” of Allstate.
Almost a week after State Farm, California’s largest property insurer, announced that the company would stop accepting insurance applications for all business and personal property in California, another company is making headlines for a similar decision.
Allstate told California’s Department of Insurance that it would stop selling new homeowner insurance to those in the Golden State last year, though the news didn’t seem to make waves until recently, the San Francisco Chronicle reported.
Allstate was the state’s fourth-largest property and casualty insurance provider in 2021, and a company representative confirmed to KTLA that the decision to stop accepting new homeowner insurance claims is to “protect current customers.”
“We paused new homeowners, condo and commercial insurance policies in California last year so we can continue to protect current customers,” a company representative told KTLA. “The cost to insure new home customers in California is far higher than the price they would pay for policies due to wildfires, higher costs for repairing homes, and higher reinsurance premiums.”
California Insurance Commissioner Ricardo Lara announced new insurance protections in effect for the summer wildlife season that increase payouts and evacuation benefits for wildfire survivors in 2021. The new protections would mean “larger payouts for some claims and less red tape from insurance companies,” according to Lara.
Last year, the commissioner enforced the new insurance pricing regulation under the Safer from Wildfires framework, requiring insurance companies to provide discounts to consumers who follow safety measures such as upgraded roofs and windows to prevent wildfire risks.
The new regulation aims to reduce insurance costs and create consumer risk rating transparency.
Allstate didn’t specify how this decision would impact current home insurance customers or if they could renew their policies. The state doesn’t require potential homeowners to have insurance; however, many mortgage lenders may require some proof of insurance as a loan condition.
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