Bad News: State Farm stops providing homeowners insurance in CA due to climate catastrophes

A firefighter tried to save a home in Meyers, CA, in 2021.Credit: Max Whittaker, NYT

By Courtney Crawford and Alliance President Terry Gips

The climate crisis is becoming a financial crisis and it’s spreading. The largest homeowner insurance company in CA, State Farm, recently announced it would stop selling coverage to homeowners, not just in wildfire zones, but statewide, according to CNNWhile State Farm said it recognized the work CA state officials have done to combat wildfires, they can’t ignore the financial consequences. The insurance industry has known about climate risk since the 70s, but its 2005 record-breaking hurricanes losses made them act, according to Grist.

Insurance companies’ whole business model is based on risk. As Roy Wright, the former official in charge of insurance at the Federal Emergency Management Agency and now head of the Insurance Institute for Business and Home Safety said, Risk has a price” and while “we’re just [starting to see it] now,” it’s going to continue to grow.

In parts of eastern Kentucky ravaged by storms last summer, the price of flood insurance is set to quadruple, according to CNN. In Louisiana, the top insurance official is offering millions in subsidies in an attempt to draw insurers to the state. And in much of Florida, storm coverage is increasingly hard to come by, with most big insurers already having pulled out of the state. 

This shift puts the burden on state and federal governments when these increasingly frequent disasters occur, according to Grist. While State Farm’s announcement is negatively impacting many Californian homeowners, hopefully the burden will lead to fundamental change in climate action and policies by everyone from the government to business and even citizens.

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