State Farm Pulling Out of Home Insurance Market in California

Readers of this blog will recall how I’ve been predicting that insurance companies will start pulling back from issuing policies in high-hazard areas.

Now we have this: “State Farm stops new home insurance sales in California as wildfire risks grow.”

A Washington Post story (paywall, sorry) shared that homeowners in Florida and Louisiana are also seeing the cost of home insurance policies rise — and having trouble finding companies that will insure their properties.

Previously, I’ve also predicted how governments, in order to fuel the construction industry, will likely move in with some form of subsidized policies. That is happening in Florida and Louisiana already — still, there are problems in both states.

Home insurance will be the thing that blows up everywhere as insured property losses mount and private-sector companies have a fiduciary responsibility to act “responsible,” as opposed to governments.

If you want to mitigate future losses, let the market send the message to those who don’t care about where they want to build and the risks they are willing to take.