Home>Articles>Not In Good Hands: Allstate Also Stops Accepting All New Home Insurance Applications in California

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Not In Good Hands: Allstate Also Stops Accepting All New Home Insurance Applications in California

Largest, Fourth largest insurance companies in state no longer accept new home insurance applications

By Evan Symon, June 3, 2023 2:30 am

Allstate, one of the largest insurance companies in California revealed to the Department of Insurance on Friday that the company stopped accepting all new home insurance applications in California last year.

Insurance companies have been on shaky ground in California for the past several years, with companies somewhat pulling back from the state through actions such as  GEICO closing down all 38 of their offices in the state last year and State Farm raising driving insurance rates in March. However, the largest action came just last week when State Farm Insurance, the largest property and casualty insurance company in California, announced that they would no longer be accepting new applications for any kind of insurance other than personal vehicle insurance due to large increases in construction costs and inflation.

While technically first, Allstate had not formally announced its decision until Friday, instead opting for a quieter route. However, their hand was finally shown this week because the company needed to disclose their action in a notice to the Department of Insurance requesting a 40% rate increase for home and business property and casualty insurance. It was also noted that current Allstate customers would not lose their insurance.

Following public outcry, Allstate gave their reasons on Friday, noting in a statement from a company representative that “The decision to stop accepting new homeowner insurance claims is to protect current customers. We paused new homeowners, condo and commercial insurance policies in California last year so we can continue to protect current customers. The cost to insure new home customers in California is far higher than the price they would pay for policies due to wildfires, higher costs for repairing homes, and higher reinsurance premiums.”

While the reason was similar to State Farm’s, many insurance experts noted that more companies halting new policies was expected, but that it could also lead to major problems for the state in the coming years.

“If you want to buy a house in California with a loan from a bank or lending company, you need that proof of insurance before you can buy,” explained Trevor Connery, a lobbyist who has worked for insurance companies in the past, to the Globe on Friday. “With State Farm and Allstate out, which are California’s first and fourth largest insurance companies respectively, this makes it so much harder for potential homebuyers to get a home. They’ll either have to go with insurance companies looking to really increase rates for insurance, go with less scrupulous loan companies that will charge them a lot more for interest, or pay completely in cash and not get insurance. All are not great options.”

“There is no easy fix for this. Wildfire risk and other hazards have really made it harder to insure here, even in areas with lower risk. You could make rates more regional, get insurance that clearly doesn’t cover some incidents, but then you ruin people as a result. The state could also create their own insurance company as a major option, but I don’t need to tell you that that would lead to disaster. This is bad, and we don’t know if more will stop new applications soon as well.

Other insurance companies in the state are likely to make decisions on new property applications soon.

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7 thoughts on “Not In Good Hands: Allstate Also Stops Accepting All New Home Insurance Applications in California

  1. In many ways this is even more telling than brick and mortar businesses bailing from California. Yet our narcissistic governor believes he should be President. California is so messed up it cant fart and walk at the same time.

  2. Blame it on lawless Democrats with their state destroying policies and legislation that has made the state uninsurable.

  3. This will hurt rural Californians the most. The one’s Democrats hate because they tend to lean more Republican or at least moderate. Doubt the government will lift a finger to help them out. I feel bad for rural Californians because they pay taxes and are almost completely ignored by Sacramento. Now they may just be driven out of the state entirely.

  4. I love all these comments blaming the governor or democrats, but the same thing is happening in VERY red Florida. Insurance companies are pulling out left and right. Comes down to basic capitalism. Shareholders always win

    1. Insurers in California are raising premiums and pulling out of the state because of the policies and legislation passed by your communist Democrat masters who completely control California. They have allowed property crimes to become out of control with their coddling of criminals and their constant attacks on law enforcement. They have refused to allow private and public lands to be properly maintained by removing underbrush and thinning of trees. Your corrupt Democrat masters are behind the insurance mess in California.

      BTW, Florida is not a VERY red state. DeSantis won the governor’s office in 2018 by only about 30,000 votes after his opponent Democrat Andrew Gillum who was caught in a sordid scandal involving a male prostitute and illegal drugs. High insurance costs in Florida are mainly weather related with regular floods and hurricanes along with rising replacement costs.

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