State Farm is closing its doors to millions of new customers exposed to ‘rapidly growing’ catastrophes — here’s who’s affected

The EPA reports that wildfires are getting worse as the planet gets warmer. In response to this and other factors, major insurer State Farm has announced that it will no longer offer homeowner’s insurance to new applicants in fire-prone California.

What’s happening?

According to the EPA, the area burned by wildfires each year has been increasing since the 1980s. The 10 most destructive years on record have happened in the past 20 years, causing more damage thanks to the plentiful dry plants left behind by drought.

While the effects are felt across the U.S., California is famous for its yearly wildfires and the resulting smoke. This year has been particularly hard for the state due to a devastating combination of storms, floods, drought, and fire.

As Axios reports, this became too much risk for State Farm. The company cited “historic increases in construction costs outpacing inflation” and “rapidly growing catastrophe exposure” in its decision to close applications across California in May.

Why does it matter?

For homeowners in California, it will now be harder to find affordable coverage for their property. Without it, residents run the risk of losing everything in a fire. Owners that already have coverage are still protected, but State Farm won’t accept any new applications in California, it says.

But the problem extends beyond California. Disasters of all kinds have become more common and more destructive as rising temperatures across the world have caused the weather to become less stable.

If insurers find it too risky to cover areas affected by these disasters, then more and more regions could find themselves without coverage. Louisiana and Florida are already losing coverage thanks to predictions of an active hurricane season, Axios reports. Ironically, State Farm has announced its intent to remain in Florida despite large competitors like Farmers and AAA pulling out.

What’s being done?

Michael Soller, the California deputy insurance commissioner, told Axios in an email that the California Department of Insurance is dedicated to protecting consumers in the long run.

“We have been here before after major wildfires,” he said. “What’s different is the actions that we are taking with the first-ever insurance discount program for wildfire safety and unprecedented wildfire mitigation investments from the Legislature and Governor.”

In other words, the CDI is working with the state government to lower insurance costs and reduce the risk of wildfires so that insurers can be secure operating in the area once again.

Join our free newsletter for cool news and actionable info that makes it easy to help yourself while helping the planet.

Source link



Leave a Reply

Your email address will not be published. Required fields are marked *

On Key

Related Posts