State Farm expands renewal offers to all L.A. County policyholders slated to have been dropped
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State Farm said Thursday it was expanding an offer to renew residential policies it had intended to drop last year to all Los Angeles County customers.
The decision applies to policies held by homeowners, owners of small rental properties and residential community associations facing non-renewal notices that had not gone into effect as of Jan. 7, when the Los Angeles fires began.
Before the devastating fires burned across Los Angeles, many homeowners learned they were losing their insurance policies. Some faced big increases in premiums that they couldn’t afford.
On Wednesday, the insurer told the Times it would offer renewals on those terms to any policyholder affected by the Palisades, Eaton and other fires that broke out in the county. The insurer estimated that it would apply to roughly 70%, or 1,100, of the 1,626 residential policies it had in Pacific Palisades’ primary 90272 ZIP Code when last year it announced a slate of non-renewals.
The offer does not apply to policies that had already lapsed when the fire started on Jan. 7. State Farm is the largest home insurer in the state and has 250,000 residential policyholders in Los Angeles County.
The Department of Insurance said that among the thousands of policies State Farm had targeted for nonrenewal, more than 7,600 were in the Palisades fire zone. There were also 525 more in San Gabriel Valley’s Eaton fire and additional policyholders elsewhere but an exact number was not available.
It’s unclear how many of those policies, or others outside the fire zones, had already lapsed prior to Jan. 7. However, State Farm said about two thirds of the policies it had targeted for non-renewal are still in force.
“This decision reflects our commitment to supporting our customers and goes beyond the Department of Insurance’s request. This is an evolving situation, and our focus remains on our customers,” State Farm spokesperson Bob Devereux said Thursday.
Coverage of the firefighters’ battle against Eaton and Palisades fires, including stories about the dangerous weather and victim frustration.
State Farm said in March that it would not renew roughly 30,000 homeowners, rental dwelling owners and residential community associations, as well as business properties. It also said it would stop offering commercial polices to apartment owners and not renew roughly 42,000 of those policies in place. Renter’s policies that insure a tenant’s belongings were not affected.
Rental dwellings are defined as having one or two rental units, while commercial apartment policies cover three or more, State Farm said. Residential community associations include homeowner and condominium associations.
That decision by the Bloomington, Ill., insurer has drawn outrage given the enormous scale of the Palisades and other fires in Los Angles County, which have damaged or destroyed more 12,000 structures and killed more than two dozen people.
State Insurance Commissioner Ricardo Lara had urged insurers last week to suspend pending nonrenewals in the Palisades and Eaton fire zones.
“State Farm is setting the tone for other insurance companies to follow and we are going to push for this for other companies as well,” Lara spokesman Michael Soller said Thursday in response to State Farm’s latest announcement.
Lara announced this week he had expanded the boundaries of a moratorium he issued last week that bars insurers from issuing new cancellation or nonrenewal notices for one year. It applies whether or not homeowners have suffered a loss.
The expansion adds 22 ZIP Codes to Pacific Palisades and Eaton fire zones, and for the first time protects homeowners living in the Hurst, Lidia, Sunset and Woodley fire zones.
The insurance commissioner does not have authority to suspend nonrenewals previously sent to policyholders.
Soller said that under existing law if policyholders were notified about a nonrenewal but the policy was still in effect and they experienced a “total loss,” State Farm is required to offer them two policy renewals anyway. However, that law does not apply to damages that are less than a total loss.
Devereux said that the policyholders with total losses would get two renewals, as required by law.
State Farm announced this week it will not renew 72,000 policies in California amid a tight insurance market.
State Farm said Thursday it has received more than 7,850 home and auto claims and has already disbursed more than $50 million to fire victims — numbers it expects to rise.
Jon Farney, chief executive of State Farm Mutual Automobile Insurance Co., parent of California subsidiary State Farm General, told the Times in an interview Tuesday that the fires already are the largest wildfire disaster the insurer has ever experienced. State Farm is the largest property and casualty insurer in the country.
Insurance Commissioner Ricardo Lara has issued a one-year moratorium on home policy non-renewals and cancellations in the Pacific Palisades and the San Gabriel Valley’s Eaton fire zones.
“We are in the business of helping people recover, and that’s exactly what we’re doing right now to those impacted by the fires. It’s just such a horrible tragedy,” he said, before State Farm suspended its pending non-renewals in the L.A. County fire zones.
However, he said it was too early to determine the damages, though at least one estimate has put them over $200 billion, which could exceed Hurricane Katrina and make it the most expensive disaster in the nation’s history.
“This early in this kind of event, especially as it’s still ongoing, we don’t have information of how big the event is going to be for us, let alone for the industry,” he said.
He called the company’s decision in March to not renew 72,000 policies very difficult, but said it was driven by calculations that State Farm could not afford to take on more risk due to the possibility of being overwhelmed by claims in a catastrophe.
“You have to manage the amount of concentration that you have and the financial risk that you have, so we are positioned to ensure that we can keep our promises,” he said.
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