State Farm, the largest home insurer in California, has encouraged customers affected by the devastating fires to file damage claims with the company whenever they're ready to do so.
"We are here for our customers to help begin the process of recovery," the company, which canceled hundreds of home policies in Pacific Palisades last summer, said in a statement released earlier this week.
Why It Matters
State Farm and other insurers operating in Southern California can expect a barrage of damage claims in the coming weeks. The fires, some of which are still burning partially or completely out of control, have burned through tens of thousands of acres and destroyed thousands of structures, including many homes.
J.P. Morgan analysts said Thursday that economic losses stemming from the fires might exceed $50 billion, with insurance losses alone exceeding $20 billion "and even more if the fires are not controlled." Private forecaster AccuWeather estimated the combined damages and economic losses to reach between $135 billion and $150 billion.
Insurance will be crucial for California homeowners who have lost their homes to take the reins of their lives back—but this kind of enormous loss is exactly what insurers in the state have been trying to avoid in recent years.
What To Know
As of 2023, the latest data made available by the California Department of Insurance (CDI), State Farm had a 21.22 percent market share in the Golden State's property insurance sector. Despite announcing in the same year that it was not accepting new homeowners insurance applications in the state and non-renewing thousands of home policies last summer, the company remains by far the largest of its kind in California.
State Farm knew that it was facing the increased risk of paying enormous damage claims in Southern California should a particularly destructive fire strike the region. That's why, citing increasing costs and catastrophe exposure, last year it announced it was canceling 72,000 policies in the Golden State by the summer—including hundreds of homeowners policies in Southern California.
For a full list of last year's cancellations, check our list here. In Pacific Palisades, one of the neighborhoods ravaged by the Palisades fire, State Farm canceled 1,626 policies last year.
Why Did State Farm Pull Out of California?
In a March update, State Farm said that the decision to cancel thousands of policies in California was "not made lightly" and was only reached after "careful analysis" of the company's financial health, "which continues to be impacted by inflation, catastrophe exposure, reinsurance costs, and the limitations of working within decades-old insurance regulations."
The decision to not renew thousands of policies in California, ultimately, was justified by the company as a way "to maintain adequate claims-paying capacity for our customers and to comply with applicable financial solvency laws. It is necessary to take these actions now," it added.
State Farm is not an isolated case. Citing increasing costs and growing risks, several other insurers have also cut coverage across California in recent years, especially in the most vulnerable areas of the state.
As a consequence of these decisions, California homeowners are increasingly struggling to find coverage, and the state's insurer of last resort, the FAIR Plan, has been increasing its overall policy count.
What is State Farm Offering Now?
State Farm is encouraging customers in areas affected by the fires to file a claim "when it is safe to do so" and is offering the option of delaying their premium payments if needed.
"Agents can also help and, if needed, give customers more time to pay their premium. Our teams are standing by to assist," State Farm wrote in its recent statement.
Customers can contact their local agent, call 1-800-SF-Claim, use the State Farms' mobile app or visit statefarm.com, according to the company's website.
What People Are Saying
In a comment to Newsweek earlier this week, a spokesperson for State Farm said: "Our number one priority right now is the safety of our customers, agents and employees impacted by the fires and assisting our customers in the midst of this tragedy."
AccuWeather Chief Meteorologist Jonathan Porter said: "These fast-moving, wind-driven infernos have created one of the costliest wildfire disasters in modern U.S. history."
What's Next
As of early on Friday, several fires continued burning through Southern California.
The Palisades fire, which has burned across nearly 20,000 acres since starting on Tuesday morning, was 6 percent contained. The Eaton Fire, which has moved through more than 13,000 acres after igniting on Tuesday night, was still out of control.
The Kenneth fire, which broke out on Thursday and has burned through nearly 1,000 acres, was 35 percent contained as of the latest updates by the California Department of Forestry and Fire Protection, or Cal Fire.
Have You Been Affected?
If you're a Southern California resident who's been affected by State Farm's cancellations last year, please get in touch by emailing g.carbonaro@newsweek.com.
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