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SAN DIEGO (FOX 5/KUSI) — State Farm is dropping 30,000 homeowner’s insurance policies in the California this summer, including many people living in 50 zip codes across San Diego County.
A percentage of customers in Rancho Santa Fe, El Cajon, Lakeside and University Heights will be
affected.
State Farm says they are discontinuing coverage for some customers because of inflation, regulatory costs and increasing risks from catastrophes, ranging from wildfires to floods.
”You have to shop in a market for a new policy in a marketplace that is incredibly restricted,” said Scott Sherman, a former San Diego Councilmember and San Diego Insurance Brokers Association President, who joined FOX 5/KUSI in studio on Friday.
It’s a scramble for more than 2,000 local state farm homeowners insurance policyholders, who will lose their protection when their current contracts expire.
A percentage of those who live Jamul, Tierrasanta, Lakeside and Poway, for example, will be denied because the company says the risk is too high for them.
“In an average year, a company makes about five cents on the dollar, an insurance company, now they’re spending about a $1.15 for every dollar they bring in, and they said “well, if you won’t let us take rate, we’re just going to quit writing or leave the state,’” Sherman said.
Sherman says politics is why insurance companies have had enough. He says the issue grew during COVID when the insurance commissioner wanted carriers to give rebates to policy holders who were on lockdown.
“The insurance community didn’t like that, some did the rebates, some didn’t. The insurance commissioner got mad, wouldn’t let them take small incremental increases in premiums over the last three to four years,” Sherman said.
Sherman says one of his clients in Fallbrook, which Is considered a wildfire-prone area, was shocked when he had to update his policy.
“Their premium last year with an admitted carrier was a little over $19,000. This year, because there’s nobody writing except one or two companies, the best quote I could find for them was $109,000.
Gov. Gavin Newsom recently did an emergency declaration directing the insurance commissioner to make some changes, which could happen by the end of the year.
“I’ve seen this before where companies have left California, some changes happen, get more competitive, they all came flooding back in and premiums went right back down,” Sherman said.
It’s important to note that non-renewal is not canceling. Customers affected by the decision will retain coverage until their current contract is up.
State Farm says those impacted will be notified between July 3 and Aug. 20.
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