Allstate, the third-largest insurer in California, quit issuing homeowners insurance in the Golden State, citing sizable risk from natural events such as wildfires and earthquake producing fires.
The news comes after similar moves in markets in Florida and New York, which Allstate exited because of related concerns such as hurricane and storm damage.
In 2003, the Southern California wildfires cost the company roughly $300 million, and the ensuing drought in the region could lead to more substantial fires in coming years.
Allstate will stop writing new homeowner policies in July, although current customers will continue to receive coverage and will have the option to renew when their current contracts expire.
However, many customers are outraged by news that Allstate is lobbying to raise insurance premiums 12.2 percent for its’ 900,000 policy holders in California.
If anything the news will create opportunity for other insurance companies in the state, as well as discounts for current and potential homeowners.
During the first quarter of 2007, Allstate wrote 11,000 new homeowners policies in California, down from 16,000 for the same period last year.
If you’re currently shopping for homeowners insurance, take a look at all your options. There are over 100 insurance companies servicing California, and there will likely be specials offered by competing companies because of Allstate’s retreat.
Remember, if you have a mortgage you need homeowners insurance, so include that in your to-do-list when shopping for a new home.