LOS ANGELES (KABC) -- Amid an ongoing insurance crisis in California, many customers are being dropped by their insurance companies.
And among those who can get insured, including homeowners and drivers, the coverage is likely to cost more.
"I contacted nine insurance companies and none of them wanted to take us. None of them," says customer Steve Besbeck.
Besbeck says after 15 years his former insurance company dropped him. So he had to go with the California FAIR plan for fire coverage. The FAIR plan is for California homeowners unable to find insurance in the traditional marketplace.
Besbeck still had to get a separate policy for other home risks. "And the premium increased about 30% year over year with FAIR plan so it's been very expensive," he said.
Insurance policy costs have gone up steadily every year, from just over $1,000 in 2015 to almost $1,500 in 2021.
"I think the home insurance industry is abandoning Californians who have diligently paid their premiums for decades," said Carmen Balber with Consumer Watchdog, an advocacy group.
More and more Californians are finding it difficult, or even impossible, to keep their homes insured amid skyrocketing rates and policies being canceled by insurance companies.
According to insurance agent Rick Dinger, finding polices for his clients is nearly impossible.
"Ninety percent of our job is talking people off the ledge and explaining to them that it's not them, everyone is going through the same situation right now," said Dinger. "It's very few, and the rest we say 'I'm sorry we can't help you.' Or the rates are so outrageous they get upset and don't call back."
Experts say there are things you can do so your insurer is less likely to drop you. One thing is to make sure you have enough coverage to rebuild.
"Sometimes construction costs are not equal to fair market value. They are higher and so it really just depends, but you do want to pay special attention to what those costs are going to be and make sure that your insurance coverage matches that," said Omar Ochoa, an attorney and Insurance expert.
Higher insurance costs are not just hitting customers with big increases in homeowners polices, but also with auto policies. Besbeck says he's been struggling with both. When it comes to car insurance, he's driving less but paying more.
"I drove less than 4,000 miles last year on each of our cars. We have two cars and insurance went up this year like 20%, something like that, for nothing," said Besbeck.
California regulates insurance companies and their rate increases, so a number of insurance companies have simply pulled out of the state.
It's one reason it's getting harder to find a policy. Allstate stopped issuing homeowners insurance policies to new customers in California in 2022, and stopped directly selling new auto insurance policies in the state. The company decided to return but only after regulators agreed to let it raise auto insurance rates by an average of 30%.
Allstate always offered auto insurance policies to new customers through agents.
"Just to be clear, that Allstate increase, that 30% increase, was an auto insurance increase, not a home increase," Balber said. "But we're absolutely seeing insurance companies holding California hostage for deregulation that they're trying to get out of the Department of Insurance."
Editor's note: This story has been updated to clarify that while Allsate temporarily stopped selling new auto insurance policies, the company continued to offer such policies through agents. A previous version also stated that Allstate stopped issuing homeowners insurance policies to new customers in California last year. That has since been updated.
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FAQs
Over the past two years, many home insurers — including State Farm and Allstate — have stopped writing new policies in California. Others have left the state altogether. Many have cited unprofitability due to wildfires, inflation and the cost of rebuilding.
Why did State Farm cancel my policy? ›
The Illinois-based company, California's largest insurer, cited soaring costs, the increasing risk of catastrophes like wildfires and outdated regulations as reasons it won't renew the policies on 30,000 houses and 42,000 apartments, the Bay Area News Group reported Thursday.
Which is the most likely reason your auto insurance policy will be canceled? ›
Common reasons for canceling a policy include excessive claims, a DUI conviction or nonpayment of premiums. You're more likely to be dropped after a claim or face non-renewal if you're a high-risk driver.
Does cancelling insurance raise rates? ›
If you cancel your insurance policy instead of suspending it, your insurance company will likely view this break as a lapse in coverage and your insurance premium may increase when you purchase a new policy.
Why is Geico pulling out of California? ›
The conditions in the state have led the insurers to believe that California drivers are too expensive to insure. Auto accidents increased 25% between 2020 and 2021, where at the time, premiums increased only 4.5%. The insurers were paying more in claims than they were making in premiums.
Why is State Farm dropping customers? ›
State Farm said it is dropping policies across California for financial reasons and is ending coverage in areas with wildfire hazards, among other factors. A company spokesman declined to explain further how it decided which homes to drop.
Is a Cancelled insurance policy bad? ›
Besides facing higher rates, it's also possible that it will be more challenging to find insurance if you've let your policy lapse. Letting your policy lapse is one sign to insurers that you're a high-risk driver.
Is State Farm pulling out of CA? ›
State Farm General Insurance Company has announced that it will non-renew approximately 30,000 California homeowners, rental dwelling, and other property insurance policies.
Why are insurance companies not writing new policies in California? ›
Allstate stopped writing new homeowner policies in November 2022 due to wildfire risk, the cost of rebuilding homes and the rising price of reinsurance, which is insurance for insurers.
Why is it so hard to get car insurance in California? ›
Factors like inflation and a greater number of accidents can make taking new business in California less attractive when the rates can't be raised higher. In addition to auto insurance, it is currently harder for Californians to get home insurance because the prevalence of wildfires is growing more common.
Cancellation notices are sent when: Your payment due date has passed. And the amount due has not been paid.
What is the recommended auto insurance coverage in California? ›
Most financial experts recommend raising your liability to $50,000 per person and $100,000 per accident if you have few assets. With more assets — like a house, expensive car, or large amounts of savings — experts recommend bumping your coverage up to at least $100,000 per person and $300,000 per accident.
Why are insurance rates going up in California? ›
ABC10 asked Newbill what is contributing to this change in recent years, and he said, for one, inflation. "Along with that has come the cost to repair vehicles, the cost for parts to do that and the rise in higher payments in claims for car accidents and that's related to the cost of healthcare," he said.
What is the cheapest insurance in California? ›
Our most recent analysis found that the cheapest car insurance company in California is Auto Club of SoCal at $1,187 per year on average, or $99 per month, for full coverage. Meanwhile, the average cost of full coverage car insurance in California is $1,630 per year, or about $136 per month.
Are insurance companies overcharging? ›
After a systematic review of data submitted by insurance companies — the only such review in the country — he has found that insurance companies continued to overcharge consumers despite drastically reduced risk of accidents and loss due to the ongoing pandemic.
Why is State Farm pulling out of California? ›
State Farm, California's largest home insurance company, announced it would be discontinuing coverage for 72,000 homes and apartment policies in the state starting this summer. The insurer blamed inflation, regulatory costs, and the increasing risks from catastrophes for its decision to scale back in the blue state.
What insurance companies are leaving California? ›
Tokio Marine and Trans Pacific join State Farm and Allstate in discontinuing coverage for California residents.
Is Allstate pulling out of California? ›
Allstate announced in November 2022 that it would "pause new homeowners, condo and commercial insurance policies in California to protect current customers," the Associated Press reported in June.
Is USAA pulling out of California? ›
To clarify, State Farm, Allstate Farmers USAA, Travelers, Nationwide and Chubb are still active in California, they have just either limited or stopped writing new home insurance policies. Current home insurance policies with these providers are still being honored.
