Written by: Rashawn Khamari Merchant

Citing the growing risk of wildfires, State Farm has stopped accepting new policies for homeowners’s insurance. 

In a statement released by the company, “State Farm General Insurance Company made this decision due to historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure, and a challenging reinsurance market.”

The company cites avoiding the rising rebuilding costs as necessary to improve its financial strength. 

Limiting insurance is an unprecedented move. 

State Farm was the leading company offering insurance to homes in California, where property ownership is one of the most lucrative industries. 

The new update applies to personal and business properties; however, they will continue to serve existing policy plans. State Farm has also said personal auto will still be covered. 

One of the consequences of climate change is companies weighing insurance risks. High flood and tornado zones may soon face similar results. Many insurance companies are in a tight bond as disasters destroy and displace hundreds of thousands of people each year. 

Opposition to insurance change is that coverage options should be a need, but as most insurers are private, the government may have to step in. 

California has some of the most expensive housing costs, so expect this story to continue.