State Farm announced its exit in a corporate press release dated May 26, 2023. Effective the next day, State Farm General would accept no new applications for home insurance anywhere in California. The biggest home insurer in America was walking away from the whole state. The company blamed "historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure, and a challenging reinsurance market." The pause still holds.
Ten months later the company moved to cut the customers it already had. In March 2024 it said it would drop roughly 72,000 California policies, about 2 percent of its book in the state, on a rolling schedule starting that July. Eight days after that announcement, the rating agency AM Best downgraded State Farm General from A, meaning Excellent, to B, meaning Fair, and called its balance sheet weak. By June the company was asking regulators for a 30 percent rate increase on the homeowners it kept.
State Farm concluded California was a losing bet and shrank its exposure ahead of the next fire. The customers it kept are funding the retreat. Its own paperwork says as much. In rate-case filings, State Farm projected its California policy count would fall from 3.1 million at the end of 2023 to 2 million by the end of 2028, according to the Los Angeles Times.
Then the hills went up.
The Palisades and Eaton fires killed 31 people and destroyed more than 16,000 structures in Los Angeles County in January 2025. State Farm has since paid more than $5.7 billion on roughly 13,700 auto and home claims from those fires. The company put its total cost at $7.6 billion; the Los Angeles Times reported reinsurance would shrink the net loss to about $612 million.
A month after the fires, State Farm asked California for an emergency 22 percent homeowners increase. Commissioner Ricardo Lara gave it 17, effective June 1, 2025. Nothing like it had ever been approved in the state. The deal came with strings, including a $400 million surplus note from parent State Farm Mutual, a freeze on new block non-renewals through the end of 2025, and refunds with interest if a full hearing later cut the number. A three-way settlement in March 2026 locked in the 17 percent, trimmed the condo and rental-dwelling increases with refunds plus 10 percent interest, and extended the freeze at least another year.
Two months after signing that settlement, Lara's department took legal action against State Farm, alleging 432 violations of California's claims-handling law in its wildfire response. Examiners pulled 220 claims and say they found violations in 114 of them. "Wildfire survivors came to us for help, and we followed the facts. Our investigation found that State Farm delayed, underpaid, and buried policyholders in red tape at the worst moment of their lives," Lara said. State Farm said it rejected "any suggestion State Farm engaged in a general practice of mishandling or intentionally underpaying wildfire claims." The allegations are unproven, and the penalties could top $2 million if they stick. State Farm still writes no new home policies in the state.
The plan nobody chooses.
In California, a dropped homeowner lands on the FAIR Plan, the insurer of last resort. It grew 44 percent in roughly a year, from 464,900 policies in fall 2024 to 668,600 at the end of 2025. By March 2026 it held 684,388 policies and about $750 billion in exposure. In February 2025, Lara approved the plan's request for a $1 billion assessment on the state's insurers, its first in more than 30 years, and those insurers can apply to recover half of it from their own customers through a temporary fee.
Now comes the bill for staying. California has approved a 29.1 percent average increase in FAIR Plan dwelling rates, effective October 15, 2026, for new and renewal business. The plan had asked for 36. It is the largest increase in the plan's recent history, ahead of roughly 20 percent in 2019 and about 16 percent in both 2021 and 2023. In the first quarter of 2026 the plan added 15,779 policies and $27 billion in exposure, and exposure is up 25 percent year over year.
Other states already ran this film.
Allstate stopped writing new California home and condo policies in November 2022, six months before State Farm, and in August 2024 won a 34.1 percent increase covering more than 350,000 policyholders. Farmers capped its new California homeowners business at about 7,000 policies a month in 2023, then eased back in December 2024, lifting the cap to 9,500 and crediting the state's new pricing rules. Farmers also pulled its Farmers-branded home, auto and umbrella policies from Florida in July 2023, dropping about 100,000 policyholders, while its Foremost and Bristol West subsidiaries kept writing there. That exit came after 18 months in which 15 Florida home insurers froze new business and seven went insolvent. Eleven Louisiana property insurers failed between July 2021 and September 2022, and that state's last-resort plan nearly tripled, from about 40,000 policies to 112,000, in nine months.
The early warnings are boring documents: the last-resort plan's enrollment counts, and the price of catastrophe reinsurance, which jumped 31.3 percent at the January 2023 renewals on Guy Carpenter's index and still sits above every pre-2023 level after two softer years. California's counteroffer is a trade: insurers that use the state's new catastrophe-modeling pricing rules must write at least 85 percent of their statewide market share in wildfire-distressed areas, or grow their distressed-area writings 5 percent a year until they get there. Farmers cited those reforms when it came partway back. State Farm has not come back at all.
The non-renewal letter arrives after the market has already thinned, and the FAIR Plan quote that follows will reflect October's 29.1 percent average increase. Under the March settlement, State Farm's freeze on block non-renewals runs at least through the end of 2026. That is the window.
State Farm will still sell you auto insurance anywhere in California. Its home business has been closed to new customers since May 27, 2023. No reopening date has ever been announced.