One of California's largest home insurers is exiting the condo and rental insurance markets in 2026, leaving many residents worried about increasingly limited — and expensive — options.

What's happening?

The San Francisco Chronicle reported on the move, which Liberty Mutual announced recently. The insurance giant will stop offering new policies in 2025 and begin dropping coverage for existing customers in 2026.

"During this time of increasing risk and volatility, we are building a sustainable business path forward in California by simplifying our product offerings and investing in the areas where we can win in the long term," the company said in a statement.

The change will affect approximately 67,500 condos and 102,200 rental properties, according to the Chronicle.

Why is this concerning?

Liberty Mutual's decision is part of a broader pattern of changes that have affected the insurance market over the last several years.

It's one that has many officials worried. Fueled by the warming atmosphere from human-generated pollution, weather events in many states — particularly coastal ones, such as California, Florida, and Louisiana — have been ramping up in frequency and severity. This has led to particularly intense wildfires, droughts, heat waves, hurricanes, storm surges, and more, which have caused significant damage to the homes in those areas.

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Given the expense of repairing these homes, insurance providers such as Liberty Mutual are deeming it in their best business interests to withdraw from the markets.

Unfortunately, when too many insurers exit a market, homeowners without other options turn to state-backed plans of last resort. And while this can provide basic emergency coverage for a limited number of people, many states have already become overburdened with the number of residents signing up.

What will the ripple effects be?

In this case, a spokesperson with Liberty Mutual said it will "help impacted customers find new coverage" to replace the insurance they are losing. Fortunately for those customers, there are still providers offering equivalent coverage, so they do have options.

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The insurance industry is also under pressure to do its part to fix the issue — and not make it worse. A recent report by nonprofit network Insure Our Future found that many major insurers are still underwriting coverage for dirty fuel companies, contributing directly to the pollution that has brought the industry to a tipping point.

Instead, insurers could use adaptive climate models and divest from those polluting companies as a step toward a more resilient — and perhaps less expensive — future.