State Farm revealed on Wednesday that it will extend home insurance policyholders impacted by the Los Angeles County wildfires with renewals that were earlier set to be withdrawn.
This resolution affects insurance policies possessed by homeowners, landlords, and housing associations, including condo associations.
This number encompasses approximately 70%, or 1,100, of the 1,626 housing policies still active in the primary ZIP code of Pacific Palisades, 90272, and also includes 1,100, or roughly 70%, in the Pacific Palisades’ main ZIP code, 90272, along with other regions in the neighborhood and county, which includes thousands more. This provision is not applicable to policies that had already lapsed on January 7, the date of the fire incident.
The Department of Insurance announced that out of the numerous policies State Farm had slated for nonrenewal, over 7,600 were located in the Palisades fire zone. The Eaton Fire in the San Gabriel Valley resulted in an additional 525 fatalities and affected policyholders in other areas.
It remains uncertain how many of these policies were already expired when the fires commenced.
“We’re dedicated to assisting individuals in their recovery, and that’s precisely what we are doing at this moment for those influenced by the fires. It’s an undeniably tragic situation,” stated California’s subsidiary State. John Farney, chief executive officer of State Farm Mutual Automobile Insurance, the parent organization of Farm General.
Mr. Farney shared these thoughts on Tuesday during an in-depth interview before the insurer communicated with the Times concerning the policy amendment.
In March, State Farm declared that it would not renew insurance policies for around 30,000 homeowners, renters, and other property proprietors. It also disclosed it would cease offering commercial insurance to apartment owners and refrain from renewing close to 42,000 active policies. Policies covering tenant belongings were not impacted.
This action taken by the Bloomington, Illinois-based insurance company is noteworthy given the vastness of the Palisades fire and other fires in Los Angeles County which harmed or obliterated more than 12,000 structures and claimed the lives of over 20 individuals. This is sparking widespread discontent.
State Insurance Commissioner Ricardo Lara last week urged insurers to pause any pending non-renewal policies in the Palisades and Eaton fire protection regions. His spokesperson, Michael Soler, stated that the department is engaging with State Farm to obtain further details regarding the announcement.
“Insurance firms, including myself, are under scrutiny right now. We will continue to strive to ensure that each individual’s claims are compensated fairly, swiftly, and in totality,” Lara expressed in a statement on Wednesday.
Mr. Lara additionally announced that he has broadened the reach of a moratorium released last week which forbids insurers from issuing new cancellation or non-renewal notifications for a duration of one year. This prohibition applies regardless of whether the homeowner has experienced a loss.
The Insurance Commissioner does not possess the authority to halt previously sent non-renewal notifications to policyholders.
Sorrell mentioned that under existing legislation, if a policyholder receives a non-renewal notice but the policy remains active and undergoes a “total loss,” State Farm would be unable to renew the policy anyway. He indicated that there is an obligation to provide policyholders with renewal propositions. However, this legislation is not applicable to damages that are below a total loss.
State Farm spokesperson Bob Devereux stated that policyholders in fire-affected zones have a one-year renewal option and those with a total loss are entitled to two renewal options, as mandated by law. He indicated that updates will be delivered.
The expansion incorporates an additional 22 ZIP codes into the Pacific Palisades and Eaton fire protection areas, for the first time safeguarding homeowners residing in the Hearst, Lydia, Sunset, and Woodley fire protection zones.
Fernie mentioned in an interview on Tuesday that the company has recorded 6,300 home and auto insurance claims, marking it as the largest wildfire disaster State Farm has ever encountered. The company stands as the largest property and casualty insurance provider in the United States.
However, he indicated that it is premature to ascertain the overall cost, with at least one estimate exceeding $200 billion, potentially eclipsing Hurricane Katrina, making it the priciest disaster in the nation’s history.
“Due to the preliminary stages of this type of occurrence, especially as it is still ongoing, no information is available on the extent of this event for us, let alone for the industry,” he noted.
He articulated that the firm’s decision in March not to renew 72,000 policies was immensely challenging, yet they calculated that State Farm could be overwhelmed with claims in the aftermath of a catastrophe. Thus, the assessment was made that the company could not bear additional risks.
“We must manage the level of focus and financial exposure, ensuring that we remain capable of fulfilling our commitments,” he concluded.