Farmers Insurance is enhancing the California homeowners insurance market by removing its cap on new policies, effective immediately. The company seeks a 6.99% average rate increase and plans to increase its policies in wildfire-affected areas by at least 5% over the next two years, which could yield around 5,596 new policies.
The insurer has noted rising claim severity related to theft, fire, and liability losses, influenced by inflation and litigation costs, although the frequency of such claims has decreased. In contrast, water-related claim frequency declined but severity increased due to shifts to higher deductibles. To mitigate future risks, Farmers is assisting homeowners with water shut-off device installations.
Farmers plans to align with the Sustainable Insurance Strategy led by Insurance Commissioner Ricardo Lara, focusing on stability and increasing coverage access. By early 2026, the company will market directly to 300,000 consumers in distressed regions and increase its discount on bundled home and auto insurance from 15% to 22%.
Despite previous limitations, Farmers has actively written new homeowners policies, confirming its commitment to California, which is its largest market. The company has seen growth in direct premiums and aimed to improve the state’s insurance marketplace. New customers must meet underwriting guidelines to qualify for coverage.
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