Californians who have struggled to find home insurance may soon have one more option. State Farm General Insurance Co. says it plans to begin offering some new California homeowners policies in December if regulators approve the filing, a limited return after its 2023 retreat from the market.
Here's what to know
The San Francisco Chronicle reported that State Farm General Insurance Co. has asked California regulators for permission to start selling new policies in the state again for the first time since 2023.
Under the filing, only homes that satisfy wildfire-preparedness requirements from the Insurance Institute for Business and Home Safety would be eligible. The nonprofit research group runs a certification program for houses designed to better withstand wildfire.
A home anywhere in California could qualify if it earns the group's Wildfire Prepared Home Plus certification. That higher standard requires substantial hardening work, including noncombustible doors and decks and detached structures placed at least 30 feet from the main home.
There is also a narrower path for homes with the less stringent Wildfire Prepared Home base certification, which would qualify only if they are in low- to moderate-risk areas.
Both certifications also hinge on meeting Zone Zero rules, which generally means clearing flammable vegetation and other materials within five feet of the house, along with adding protections such as ember-resistant vents.
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If regulators approve the filing, State Farm would cap new applications at 7,500 per year. The company did not seek a separate rate hike as part of the reopening.
More background
Few developments have defined California's home insurance crisis more than State Farm's pullback.
In May 2023, the insurer stopped taking new California business, saying wildfire exposure and rising construction costs had made the market too risky, according to the Chronicle.
It moved to drop just under 30,000 customers across the state while pursuing major premium increases for many of the policyholders it kept. Because State Farm insures about 15% of California homes, the actions of the state's largest home insurer have carried exceptional weight.
More available policies could mean fewer homeowners are pushed onto the California FAIR Plan — California's insurer of last resort.
The filing may also signal a broader change in how insurers see the state. Other large carriers have indicated they may expand if rate increases are approved, and growth in the FAIR Plan has begun to flatten after years of rapid demand.
What's being done?
Before State Farm can offer any new policies, its proposal must go through regulatory review. Allstate, another major insurer that paused new California business, would face the same process for a similar reopening plan.
State Farm has already taken a smaller step in that direction by allowing existing renters and condo policyholders to move that coverage to different apartments or condos in lower-risk areas.
"Both of these companies' filings to reopen are an equally clear signal in the other direction: Options for Californians are increasing," Insurance Commissioner Ricardo Lara said in a statement the Chronicle cited. "A filing is a starting point, not a finish line. My Department will continue to be aggressive in our review until these companies are writing policies at the scale Californians need, especially in the communities that need them most."
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