State Farm, the largest home insurer in California, has recently announced its decision to drop approximately 30,000 home, rental, and other property policies in the state. This move has caused confusion and anger among residents in Nevada County, particularly in Grass Valley and Nevada City, which are heavily affected by the cuts. While State Farm cited financial reasons and wildfire hazards as factors for dropping policies, it declined to explain further how it determined which homes to drop.
The decision by State Farm carries significant weight as it has been a major insurer in Nevada County, where many residents have already been dropped by other companies and forced to turn to the California FAIR Plan, the state’s insurer of last resort. The affected policyholders in the county express a sense of unfairness and betrayal, with emotions ranging from anxiety to dismay.
Residents in the area have invested in fire mitigation efforts, such as home hardening and community-level initiatives, but these measures have not prevented them from losing their insurance coverage. The county has the highest number of community groups dedicated to reducing wildfire risks in the country. State Farm’s decision has left many retirees, who make up a significant portion of the population, feeling the impact of the cuts.
State Farm’s California subsidiary plans to drop over 1,600 policies in three major zip codes in Nevada County alone, accounting for approximately 30% of its policies in those areas. Even State Farm agents have not been spared, with some losing coverage on their own homes. The company’s decision has led to criticism from policyholders who feel that State Farm’s actions contradict its self-proclaimed identity as a “good neighbor.”
The California Department of Insurance is implementing rule changes to stabilize the insurance market, including streamlining the approval process for rate increases and allowing the use of computer programs to estimate wildfire losses. However, the long-term effects of these changes and State Farm’s decision on Nevada County remain uncertain.
The rising insurance costs in California have contributed to a trend of people leaving the state, according to local real estate agents. However, some residents, like fifth-generation Nevada County resident Mimi Simmons, remain committed to staying despite being notified that State Farm will no longer cover their homes.
The situation has raised concerns about the future of insurance availability and affordability in Nevada County. While the community remains motivated to reduce fire risks, State Farm’s decision has left residents worried about the potential loss of their homes and the overall impact on the area’s safety and economy.