Business & Tech
Santa Monica Homes To Lose Insurance Coverage From CA's Largest Insurer
The city is among those in California slated for nonrenewal of insurance policies, set to start in the summer.
![State Farm says inflation, catastrophe exposure and reinsurance costs are among the factors that led to the nonrenewal of 72,000 insurance policies statewide.](https://patch.com/img/cdn20/shutterstock/26494162/20240409/044146/styles/patch_image/public/shutterstock-1228163239___09163946482.jpg)
SANTA MONICA, CA — Dozens of property owners in one Santa Monica ZIP code will not be allowed to renew their State Farm insurance policies, according to documents published by KTLA listing the ZIP codes affected by the company’s upcoming 72,000 nonrenewals.
California’s largest insurer announced the nonrenewals last month, which include about 30,000 homeowners, rental dwelling and other property insurance policies as well as around 42,000 commercial apartment policies statewide.
“This decision was not made lightly and only after careful analysis of State Farm General’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 company said in a news release at the time.
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The 90402 ZIP code, which includes the North of Montana neighborhood, is among those impacted. Of the 669 policies in the area, 82 — 12.3 percent — will not be eligible for renewal.
The nonrenewals will start during the summer and represent just over 2 percent of the company’s total policies in California.
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Majorly impacted ZIP codes include Pacific Palisades' 90272 (69.4 percent ineligible for renewal), Brentwood and Crestwood Hills' 90049 (61.5 percent ineligible), Hidden Hills and Calabasas' 91302 (60.4 percent ineligible), Malibu's 90265 (49.6 percent ineligible) and Beverly Hills' 90210 (46.1 percent ineligible).
In a letter to California Commissioner of Insurance Ricardo Lara, State Farm noted recent windstorms, increasing non-catastrophe water loss and liability claims, and construction inflation, remarking the company’s policyholder surplus dropped from $4.1 billion in 2016 to $1.3 billion in 2023.
The move comes as Lara undertakes a yearlong overhaul of home insurance regulations aimed at calming the state's imploding market by giving insurers more latitude to raise premiums while extracting commitments from them to extend coverage in fire-risk areas, according to the Bay Area News Group.
Last June, State Farm said it would stop accepting applications for all business and personal lines of property and casualty insurance, citing inflation, a challenging reinsurance market and "rapidly growing catastrophe exposure."
The Associated Press contributed to this story.
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