# California's Insurance Retreat: Caps, Pauses, and Silent Limits > Source: https://www.coveragecat.com/insurance-types/home/california%27s-homeowners-insurance-retreat > Description: Even insurers still in CA, such as Farmers, Liberty Mutual have started quietly capping the number of policies or being more selective. Imagine searching for homeowners coverage in 2023, only to discover that **Farmers**, **State Farm**, **Allstate**, and other stalwarts are scaling back some openly, others quietly. As wildfire losses, skyrocketing rebuild costs, and regulatory constraints squeeze insurers' margins, Californians face fewer options, higher premiums, and growing reliance on the FAIR Plan. California homeowners have been facing a steadily worsening insurance crisis over the past few years. Major carriers such as Farmers and Allstate are scaling back or stopping new policies altogether. While some insurance companies have responded with headline-making departures from the market, others are staying in - but implementing caps and becoming more selective about which properties they'll cover. - - - ### Major Announcements That Caught the Headlines * **State Farm** : In May 2023, California's largest home insurer stopped accepting all new homeowners applications, blaming "historic increases in construction costs" and rising catastrophe exposures. The California Department of Insurance approved a 17% emergency rate increase that went into effect on June 1, 2025, and State Farm is required to end any new block non-renewal programs for homeowners insurance, renters, and condo insurance policies through the end of the year. * **Allstate** : By late 2022, Allstate had paused new home and condo policies statewide. Mercury Insurance, Allstate, and CSAA were the first to respond that they plan to make filings under California's new Sustainable Insurance Strategy. * **Farmers Insurance** : Rather than exit entirely, Farmers capped new homeowners policies at about **7,000 per month** beginning July 3, 2023. Farmers had pulled back from the California market, but has since added additional home insurance policies and re-opened to the condo and renters markets. - - - ### The Silent Retreat Even insurers that remained in California are quietly limiting their exposure through less publicized means, including tightening criteria and requiring much more from potential customers: * **Liberty Mutual & Safeco** : Regulatory filings show dozens of ZIP codes—especially in wildfire- and quake-prone parts of the Bay Area—where they refuse new home policies. * **USAA** : Starting March 2024, USAA requires a **wildfire risk score of 1** (on a 1–32 scale) for any new policies, effectively excluding most fire-prone properties. * **Travelers & Chubb** : Non-renewed thousands of existing policies deemed too risky, focusing on selective renewals rather than growth. - - - ### Why Insurers Are Pulling Back From California 1. **Wildfire Frequency & Severity** The California FAIR Plan saw enrollment jump 43% between September 2024 and December 2025, following a run of catastrophic fires including the $40 billion LA fire that destroyed 12,000 homes. [Understanding the intersection of wildfire and earthquake risks](https://www.coveragecat.com/blog/between-the-fault-and-the-flames-californias-home-insurance-market) helps explain why insurers view California as uniquely challenging. 2. **Regulatory Hurdles** Under Proposition 103, insurers face lengthy, often contentious rate-approval processes. However, the Department announced it had completed the review of three forward-looking wildfire catastrophe models, which will help stabilize insurance rates and increase access to coverage. 3. **Inflation & Construction Costs** Lumber, labor, and materials costs climbed nearly **40%** from 2019 to 2023, forcing insurers to raise rate filings—often rejected under Proposition 103 rules. 4. **Reinsurance Expenses** Insurers that utilize catastrophe modeling or account for reinsurance costs in their rate filings must write at least 85% of their statewide market share in wildfire-distressed areas under the new reforms. - - - ### 4. Impact on California Property Owners * **Fewer Options** : More than 115 insurance companies currently offer California homeowners insurance, though availability varies by location and risk level. [Finding carriers still writing policies in California](https://www.coveragecat.com/blog/companies-still-insuring-homes-in-california) requires research and persistence. * **Higher Premiums** : Rate hikes of 25% or more approved by the state for many of the major national insurers, such as State Farm, Farmers and Allstate in just the last 13 months. * **FAIR Plan Reliance** : As of March 2025, the California FAIR Plan had 573,739 policies in force — an increase of 23% since September 2024 and a 74% increase since September 2023. * **Real-Estate Hurdles** : Nearly **7%** of 2023 home sales fell through because buyers couldn't secure insurance coverage, often required for a mortgage, per the California Association of Realtors. - - - ### 5. Homeowner Voices: Reddit's Take Posts in Reddit's insurance forums show the same frustration. Californians describe long broker hunts, limited appetite after prior claims, and repeated denials when they try to move off their current carrier [(Reddit / r/Insurance, "r/Insurance", 2026)](https://www.reddit.com/r/Insurance/). - - - ### 6. How to Navigate Today's Market 1. **Work with an Independent Broker.** Independent brokers can quote multiple carriers, including those that exclusively quote through brokers. Excess & Surplus brokers may also offer alternatives to the FAIR Plan that are non-admitted in your state. For expert guidance, competitive quoting, and ongoing support in high-risk areas, consider **Coverage Cat**. [Expert solutions for homeowners facing the insurance crisis](https://www.coveragecat.com/blog/expert-solutions-for-california-homeowners-facing-the-insurance-crisis) can make the difference between securing coverage and going uninsured. 2. **Pursue Mitigation Credits.** The Insurance and Wildfire Safety Act requires the Department of Insurance to regularly review its Safer from Wildfires regulations, ensuring this law reflects advancements in science, safety, and mitigation. 3. **Review FAIR Plan Options.** Use it only as a last resort, and consider a Difference in Conditions wraparound policy to fill coverage gaps. 4. **Stay Informed on Regulations.** Commissioner Lara's Sustainable Insurance Strategy requires insurers utilizing Department-reviewed wildfire catastrophe models to provide and maintain coverage in wildfire-prone areas, with reforms rolling out through 2026. \[1]: https://www.axios.com/newsletters/axios-san-francisco-5e11c6f0-d1d4-11ef-8127-a3dfc1ba360c?" Insurance chaos mounts" \[2]: https://www.latimes.com/business/story/2023-07-11/farmers-californias-second-largest-insurer-limits-new-home-insurance-policies? "Farmers, California's No. 2 insurer, caps new home insurance" \[3]: https://calmatters.org/economy/2024/03/california-home-insurance-market/? "Can California fix its home insurance market? - CalMatters" \[4]: https://sfstandard.com/2023/08/31/insurance-crisis-another-major-home-insurer-to-limit-business-in-california/? "Home Insurance Crisis: USAA To Limit Business In California" \[5]: https://apnews.com/article/047bdfa514ce93dac83c82735a15554a? "Things to know about California's new proposed rules for insurance companies" \[6]: https://www.cfpnet.com/key-statistics-data/? "Key Statistics & Data - The California FAIR Plan"