The State Farm General Insurance Company is not accepting new applications for property insurance and other policies in California, citing “historic” increases in construction costs and inflation,” the company said Friday.
Starting Saturday, the Illinois-based insurance group will stop accepting applications for business and personal property and casualty insurance. The move will not affect personal car insurance.
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“State Farm General Insurance Company made this decision because of historic increases in construction costs outpacing inflation, rapidly growing exposure to catastrophes and a challenging reinsurance market,” the company said in a press release. “The Department of Insurance is focused on the safety of our homes and communities.”
The insurance company said measures are needed to improve financial strength. State Farm agents in California will continue to serve existing customers, it said.
A spokesperson for the California Department of Insurance told Fox Business it is committed to protecting customers.
“The factors driving State Farm’s decision are beyond our control, including climate change, reinsurance costs affecting the entire insurance industry and global inflation,” the spokesperson said.
California has one of the most expensive housing costs in the country amid a shortage that many say has exacerbated the homeless crisis across the state. The state plans to spend about $30 million to build 1,200 tiny homes.
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In February, State Farm dropped new coverage for some Kia and Hyundai drivers in several states because the vehicles were vulnerable to theft, it said.