Farmers Direct Property and Casualty Insurance, a subsidiary of Farmers Insurance, has announced its decision to cease offering insurance in California. This move follows a trend of major insurers exiting the state due to increasing climate-related risks.
Key Takeaways
- Farmers Direct will stop offering new home, renters, and auto policies in California.
- Existing policies will be honored, but nonrenewal notices are being sent out.
- Farmers Insurance will continue to operate in California through other subsidiaries.
- The decision is part of a broader trend of insurers leaving the state due to climate risks.
Farmers Direct’s Exit from California
Farmers Direct recently filed a notice with the California Department of Insurance to withdraw its operations in the state. The company will continue to service existing policies but has started sending nonrenewal notices to its customers. According to a spokesperson, this move is aimed at strengthening Farmers Insurance’s ability to serve its California customers more effectively. Farmers Direct accounts for about 2% of Farmers Insurance’s overall business in the state.
Impact on Customers
For the majority of affected customers, Farmers Insurance plans to offer transitions to other Farmers entities, such as Bristol West, 21st Century, and Foremost. This action will not impact 98% of Farmers’ California property and casualty insurance policies. Customers are encouraged to contact Farmers with any questions or concerns regarding their policies.
Broader Trend Among Insurers
Farmers Direct is not the only insurer to exit the California market recently. Earlier this month, four Kemper subsidiaries announced they would no longer renew preferred home and auto policies in the state. This follows similar announcements from Allstate in June and State Farm in May. The primary reason cited by these insurers is the growing climate-related risks, such as wildfires and floods, that make it increasingly difficult to operate in California.
California Department of Insurance’s Response
In response to the increasing number of nonrenewal notices, the California Department of Insurance has released a set of tips for residents to find residential insurance. These tips include filing a complaint if a nonrenewal notice seems unfair and considering other insurance providers. Additionally, residents in disaster-prone areas are advised to check their eligibility for state-run insurance programs.
Steps for Affected Residents
If you have been impacted by an insurer leaving your market, there are several steps you can take to find new insurance coverage:
- Check Eligibility for State-Run Programs: Look into state-run insurance programs that may offer coverage in disaster-prone areas.
- File a Complaint: If you believe your nonrenewal notice was unfair, file a complaint with the California Department of Insurance.
- Explore Other Providers: Consider other insurance providers that may still be operating in your area.
The exodus of insurers from California highlights the growing challenges posed by climate change and the need for residents to stay informed and proactive in securing their insurance needs.
Be the first to comment