State Farm is closing its doors to millions of new customers vulnerable to disasters

State Farm is closing its doors to millions of new customers vulnerable to disasters.

State Farm is closing its doors to millions of new customers exposed to "rapid-growing" disasters — and here's who's affected.

The Environmental Protection Agency reports that wildfires worsen as the planet warms. In response to this and other factors, the major insurer, State Farm, announced that it would no longer offer homeowner's insurance to new applicants in fire-prone California.

What is happening?

According to the Environmental Protection Agency, the area burned by wildfires each year has increased since the 1980s, and the ten most destructive years on record occurred in the past 20 years, causing more damage thanks to the abundant dry vegetation left behind by the drought.

While the effects are felt across the United States, California is notorious for its annual wildfires and the smoke they generate. This year has been particularly difficult for the state due to a devastating combination of storms, floods, droughts, and fires.

According to the Axios report, this has become a huge risk for State Farm. The company cited "historic increases in construction costs that have outpaced inflation" and "rapidly increasing exposure to disasters" in its decision to close applications across California in May.

Why does it matter?

For California homeowners, finding affordable coverage for their property will take work. Without it, residents risk losing everything in a fire. It says owners who already have range are still protected, but State Farm will not accept any new applications in California.

But the problem extends beyond California. Disasters are becoming more common and destructive as rising temperatures worldwide make the weather less stable.

If insurance companies find it too risky to cover areas affected by these disasters, more and more areas may be without coverage. Louisiana and Florida are already losing coverage thanks to predictions of an active hurricane season, according to Axios.

What is being done?

California's deputy insurance commissioner, Michael Soler, told Axios in an email that the California Department of Insurance is dedicated to protecting consumers over the long term.

"We've been here before after big bushfires," he said. "What's different are the actions we're taking with the first-ever wildfire safety insurance rebate program and the unprecedented investments in wildfire mitigation from the legislature and governor."

In other words, CDI is working with the state government to lower insurance costs and reduce wildfire risk so that insurance companies can operate safely in the area again.

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