What's New
A subsidiary of California's fourth largest home insurer Liberty Mutual has decided to exit the state's condo and rental insurance market beginning in 2026.
Why It's Important
Several major insurers have dropped insurance coverage in the Golden State in recent years, forming part of a wider insurance crisis. California's Department of Insurance announced it would implement changes aimed at encouraging insurance companies to stop canceling policies and potentially resume coverage offers.
What To Know
Safeco, a branch of Liberty Mutual, has notified the California Department of Insurance that it will stop selling condo, rental and watercraft policies as of January 1, 2025. Beginning January 2026, nonrenewal processes will begin for these types of policies, as well as specialty vehicles, motorcycle and some auto products.
"We are simplifying and focusing our product investments, targeting core lines of business while reducing our menu of product offerings," a spokesperson for Liberty Mutual said, as per the San Francisco Business Times.
"We are committed to the California insurance market and believe our actions will provide a more sustainable path forward and fulfill our commitment to our agency partners and customers."
"With this new strategy comes the difficult decision to discontinue several of our smaller lines of business and products in California over the next two years."
Safeco has around 88,000 active condo and renters policies in California, the San Francisco Business Times reported. Newsweek has contacted Liberty Mutual via email for comment outside of regular working hours.
The Department of Insurance announced that it would enforce new regulations to expand insurance coverage in California.
Home insurance providers have been given the green light to use forward-looking computer catastrophe models to determine rates, instead of relying on historical losses. In return, the state secured a new commitment from insurers to expand coverage, particularly in areas of the state impacted by wildfires. Changes will take effect on January 2, 2025.
What People Are Saying
Regarding the enforcement of new regulations, Insurance Commissioner Ricardo Lara said: "Giving people more choices to protect themselves is how we will solve California's insurance crisis. For the first time in history, we are requiring insurance companies to expand where people need help the most. With our changing climate, we can no longer look to the past. We are being innovative and forward-looking to protect Californians' access to insurance."
What's Next
It remains to be seen whether other insurers will pull coverage from the state, particularly in light of the new regulations being approved. Major insurers such as Allstate and State Farm have either pulled or paused certain types of coverage in recent years.
However, Farmers, the second-largest home insurer in California, recently confirmed it will start selling condo policies and renter's policies again after limiting new policy applications earlier this year.
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