State Farm will offer insurance to some nonrenewed homeowners

SAN DIEGO — Some good news for tens of thousands of Californians who are bracing to lose their homeowner’s insurance with State Farm. 

The company confirmed to CBS 8 that some customers may be able to keep their State Farm homeowners insurance as a companion policy to the California FAIR Plan.

Starting July 3, State Farm will offer difference-in-conditions (DIC) policies that cover everything except fire damage.

“State Farm has always offered what’s called the DIC policy, which is the companion policy that goes on top of the California FAIR Plan,” said Karl Susman, the owner of an insurance agency in Los Angeles.

Californians became familiar with DIC policies after State Farm announced in March that it would not renew 30,000 homeowners policies statewide.

State Farm spokesperson, Sevag Sarkissian, emailed the following statement to CBS 8:

“We recognize that the insurance market in California is challenging and securing property insurance has become more difficult. We are doing everything we can to support our customers during this time. Customers affected by our March 2024 California business update may be eligible to maintain their homeowners policy with State Farm General Insurance Company by securing coverage through the California FAIR Plan and endorsing their homeowners policy with the California FAIR Plan Policy Perils Exclusion. This exclusionary endorsement will modify the customer’s existing coverage under their State Farm General Insurance Homeowners Policy by excluding coverage for perils available for purchase through the California FAIR Plan. This endorsement is available at the customer’s next policy renewal on or after July 3, 2024.  Impacted customers interested in pursuing this option should contact their local State Farm agent.”

Many nonrenewed State Farm customers had been turning to lesser-known companies like Bamboo Insurance for companion policies. 

“Dollar for dollar. If you’re looking at a DIC policy with Bamboo versus a DIC policy with State Farm, I think it’s a safe bet to say that the State Farm is going to be less expensive,” said Susman.

Nonrenewed homeowners are still likely to pay more for a FAIR Plan fire policy paired with a State Farm companion policy, however.

“Rates are going to be higher in California for property insurance more than they were, say, five years ago. Where we are right now is higher than they need to be, and that’s because this is basically the antithesis of zero competition,” said Susman.

That could change, said Susman, when new insurance reform laws go into effect — one next month and more by the end of the year — when insurance companies start to come back to California.

“When we do have a free market again, and we have hundreds of companies writing then we’ll see rates go down,” said Susman, who is not affiliated with State Farm.

So, what does this all mean for nonrenewed State Farm customers?

“I think it’s fair to say that if they’re purchasing a DIC policy with State Farm today, before that policy renews, which is a year, the likelihood is better than not that State Farm will have other offerings for them when the policy renews,” said Susman.

Another thing to consider, existing customers who stay with State Farm may qualify for a multi-policy discount if, for example, they also have auto insurance with State Farm.

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