A major homeowner insurance company announced it has eliminated the cap on the number of homeowners insurance policies it offers in California.
Farmers Insurance’s announcement marked a significant step for a state that has been working to stabilize and rebuild its private insurance market for years, according to Fox Business.
Farmers said it removed its previous cap of 9,500 new policies per month because of expectations that there will be an improved homeowners insurance market in California under Commissioner Ricardo Lara’s Sustainable Insurance Strategy.
The company first implemented a cap of 7,000 new home-insurance policies per month in 2023 before raising the cap in 2024, Fox Business reported.
Deteriorating Insurance Climate Forces Limits
Originally, the cap was put in place because the deteriorating insurance climate in California forced other insurers to limit business, Fox said. For example, Allstate stopped selling new homeowners’ insurance policies in November 2022, followed by State Farm, which stopped issuing new homeowners and many property insurance policies the next year.
Wildfire risk, home-rebuilding costs, and reinsurance costs rose much faster than insurers were allowed to increase prices, at the nurtured a bad environment for insurers to operate, Fox Business said.
Before they raise homeowners’ insurance rates, insurance companies in California need approval from the California Department of Insurance. Residents paid the price, however, and faced such issues as steep premium increases and limited coverage options.
Millions of California residents experienced increasing fear and uncertainty about maintaining coverage, Fox said.
Farmers Insurance President of Personal Lines, Behram Dinshaw, said the company’s Sustainable Insurance Strategy-inspired rating plan is designed to expand its offerings to more homeowners across California.
That includes Farmers Smart Plan Home, Farmers Smart Plan Condominium, and Farmers Smart Plan Renters policies.
‘Doubling Down’ On Company’s Commitment
“By removing the cap on offering new homeowners policies, Farmers is doubling down on its commitment to California homeowners, expanding choice and availability for consumers across the state,” Dinshaw told Fox Business.
Farmers said it also submitted a Sustainable Insurance Strategy-inspired rating plan that Dinshaw said “is designed to expand our offerings to more homeowners across California.”
The plan includes bringing, at minimum, thousands of new insurance policies to areas where people struggle to get insurance otherwise known in the industry as “distressed” locations.
Fox reported that starting early next year, the company will market directly to about 300,000 people in those distressed areas and give local Farmers agents additional tools to help with outreach.
As part of this plan, the company said it is simultaneously asking state regulators for permission to increase rates by an average of 6.99% across California, likely leading to higher premiums for most customers, Fox reported.
Farmers also said it wants to increase the discount for customers who bundle home and auto policies from 15% up to 22%.
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