In recent years, most home insurers were fleeing areas of California with high risk for wildfires. But State Farm was there, dominating the market. Then, just months before the devastating L.A. fires, the company dropped 30,000 homeowners from their books. WSJ’s Jean Eaglesham explains how the risk that State Farm unloaded is now a problem for the rest of California. Further Reading: -State Farm Was All In on California – Until it Pulled the Plug Before the Fires -Insurers’ Rule Change Puts California Homeowners on the Hook for L.A. Fire Further Listening: -Their L.A. Neighborhood Burned. Two Residents Find What’s Left. -Insuring a Home in California Is Getting Harder Learn more about your ad choices. Visit megaphone.fm/adchoices
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Sandra, can you tell me about your house in L.A.? What words would you use to describe it?
I raised four children there. It was homey. It had a view of the ocean. It had, you know, a deck on top. It was home. You know, it was home.
That's Sandra Kaler. She's 74 years old, and the house she's talking about was in the Pacific Palisades neighborhood in Los Angeles. You must have so many, but do you have a favorite memory of the place?
You know, it's just so hard to say. It's having, when the kids would have friends over, that was pretty special. They didn't think I noticed, but it was pretty special that they would do that. And then also like we had French windows that opened up and I had a fountain because I love the sound of water. And that's a very strong memory for me.
Sandra and her family lived in that house for 38 years. And the whole time, the property was covered by California's biggest insurer, State Farm. That was until last year.
And then in August, I think it was, we got a letter from them saying that, you know, you were being dropped. And we were going to be dropped. November 25th was the date.
November 25th, just six weeks before fires devastated L.A. and burned down Sandra's home. Thousands of California homeowners have been dropped by State Farm in the past few months. Many of them, like Sandra, live in areas affected by the fires.
People should know what State Farm did because we, you know, many people in our area had State Farm and we trusted them.
State Farm's decision forced many homeowners to enroll in an already stretched insurance program backed by the state, and it put even more pressure on California's broken insurance market. Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Wednesday, February 19th. Coming up on the show, State Farm, the LA fires, and California's home insurance crisis.
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