Partnership Insurance Agency

  • July 14, 2023
  • Financial Partners Credit Union

Home and Auto Insurance Companies Are Leaving California - Why and What this  Means for Consumers

California, the most populous state in the United States, has seen an exodus of home and auto insurance companies in recent years. The trend, which began in 2019, has accelerated in 2023 - most recently State Farm and Allstate - leaving many Californians wondering why and what impact it will have on them. In this article, we explore the reasons behind the insurance companies' departure and what it means for California consumers.

First, and the most significant reason behind the departures, is California's increasing wildfires. According to the California Department of Forestry and Fire Protection, wildfires cost California over $52 billion in the past five years. With the threat of wildfires increasing every year, many insurance companies are finding it difficult to sustain their business in the state. Insured losses from wildfires rose to $12 billion in 2018, up from $2.7 billion in 2017. With rising insurance claims, companies are finding it difficult to balance their books, leading them to pull out of the market.

Another reason for the exodus is the rising cost of auto insurance claims. California is a litigious state, and car owners are more likely to sue for damages in the event of an accident. This led to an increase in the cost of claims, making it unprofitable for some insurers to continue to do business in the state. As a result, they are pulling out of the market, leaving car owners with a narrower range of options.


The COVID-19 pandemic also played a role in insurance companies' departures. The pandemic caused many people to work from home, leading to a significant increase in home insurance claims. With more people working from home, the risk of property damage and liability claims increased, leading to higher insurance claims. Many insurance companies, finding it difficult to balance the risk with the rising claims, have chosen to leave the market, leaving consumers with fewer options.

With fewer options available for consumers, the remaining insurance companies have more leverage to charge higher premiums. In addition to a rise in premiums, there may also be a reduction in coverage options, leaving consumers underinsured, or worse, uninsured. Therefore, it is essential for consumers to do their due diligence for the best insurance deal. 

Financial Partners has a wholly owned insurance company, Partnership Insurance Agency, as a benefit to all members, and has options that offer top-tier coverage at competitive rates.  It is crucial to make sure you are adequately insured to protect yourself from financial losses in the event of an accident or disaster. Speak to one of our dedicated insurance representatives at 844.816.8649 to review coverage and determine if you can lower your monthly insurance premiums by bundling or changing providers.