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Farmers Insurance ended the cap on the number of home insurance policies offered in California, marking an important step for a state that has been working to stabilize and rebuild its private insurance market for years.
The insurance company announced last week that it has removed the new policies in advance of 9,500 new policies per month due to the expectation that there will be a market for continuous insurance to work. Farmers will initially use a cap of 7,000 new home insurance policies per month in 2023 before lifting the cap in 2024.
The cap was originally implemented because the deteriorating insurance climate in California forced some insurers to limit business. Allstate immediately stopped selling new homeowners insurance policies in November 2022, followed by State Farm, which stopped selling new homeowners and most property insurance policies in 2023.
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Newly constructed single family homes for sale in Encinitas, California are shown on July 31, 2019. (Reuters/Mike Blake)
The risk of wild fire, the cost of rebuilding and the cost of rehabilitation arose more quickly than the insurers were allowed to increase the prices, creating a bad place for the insurance to work. Insurance companies in the state need approval from the California Department of Insurance before raising homeowner’s insurance rates. However, citizens have paid a price, facing many problems from Steep Premium increases and limited selection. Meanwhile, millions of citizens faced fear and uncertainty about maintaining coverage.
See, President of Personal Lines Insurance, said the company’s active insurance policy is designed to increase its offerings to California home owners. These include Farmers Plan Home, Farmers Smart Plan CONDONMIKINIU and Farmers Smart Plan Renters policies.
“By removing the cap on providing new homeowner policies, farmers are doubling down on their commitment to California homeowners, expanding consumer choice and availability across the state,” Dinshaw said.
The company also posted a plan to measure insurance coverage that Dinshaw said was “designed to expand our offerings to homeowners passing through California.”
That plan includes bringing, at least, thousands of new insurance policies to areas where people struggle to get insurance in what are known in the industry as “distressed” areas.
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From early 2026, farmers will market directly to about 300,000 people in those depressed areas and provide local farmer agents to help with outreach.
But as part of the plan, the company is asking the state’s attorneys for permission to raise its rates by an average of 6.99% on all high premiums for many customers.
An increase in the rate changes the insurance rates of the formula used and generally leads to higher premiums, which is what customers pay.
However, the company wants to increase the discount for customers who combine home and auto policies from 15% to 22%.
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Farmers said it remains dedicated to helping “keep the insurance marketplace open and active by continuing to offer insurance policies for new homeowners in the state without suspension.”
Miramar Homes Miramar Beach in Montecito in Santa Barbara County on the central coast of California. (NIK Wheeler / Corbis via Getty Images)
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The insurance group has also resumed accepting new business insurance applications from customers seeking coverage for various industries and re-opening various domestic offerings from premium insurance.
