State Farm, California's largest homeowner's insurance provider, has indicated where it will not be renewing policies, and some Bay Area residents are affected, according to a document provided by the California Department of Insurance.
According to the document, State Farm will not be renewing 1,703 policies in Orinda's 94563 ZIP code, which represents 55% of the city's homeowner policies. That is the highest number of nonrenewals for one ZIP code in the state. The next highest is in Los Angeles.
Other Bay Area ZIP codes affected, according to the document, are 94549 in Contra Costa County, 95033 in Santa Clara and Santa Cruz counties, and 95404 and 95409 in Sonoma County. (Read the full State Farm document at the end of this article.)
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In Orinda, some 1,700 policies will be dropped, which is more than any other zip code in the state.
"They are not being a good neighbor," Orinda Mayor Darlene Gee said.
Gee has written a letter to the governor, insurance commissioner, and state lawmakers asking them to take action because impacted residents are having a tough time finding affordable insurance elsewhere.
Last month, State Farm issued a written statement explaining its decision to no longer write new policies for new California homes and to end coverage for about 50,000 existing California customers.
"This decision was not made lightly, and only after careful analysis of State Farm's financial health, which continues to be impacted by inflation, catastrophe exposure, reinsurance costs and the limitations of working within decades-old insurance regulations," the statement read.
Homeowners who live in areas at high risk of catastrophes like wildfires will have to buy into the California FAIR plan subsidized by the state. It’s expensive and offers only fire coverage.
Last month, a nonprofit research group said insurers have been losing money due to California premium limits and that for every $1 insurance companies receive in premiums in the state, a $1.08 is spent on paying out claims, primarily due to wildfires.
The Insurance Information Institute says the California Department of Insurance is updating regulations that could bring more policy options at competitive prices back to the state.
"To allow insurers to better manage risk, that would mean being able to charge what is commonly known as actuarially-sound rates – something that is not occurring today," said Mark Friedlander of the Insurance Information Institute.
Friedlander says it could take a few years for the California homeowner's insurance industry to stabilize even after the new laws are enacted.
