PriyaPatel
TLDR: Liberty Mutual is discontinuing fire insurance for 17,000 policyholders in California due to technology issues, not losses. This move is part of a growing trend of insurers limiting or stopping business in the state due to climate disasters, leading to rising premiums for property coverage.
Liberty Mutual Fire Insurance Company, a subsidiary of the major insurer, is canceling fire insurance policies for around 17,000 policyholders in California, citing technology issues as the reason. The company is retiring its ‘antiquated’ system for managing policies, making it unfeasible to support the product in California. This move comes as more insurers are leaving the state due to the intensifying risk of climate disasters, leading to rising premiums for property coverage. According to Redfin, over half of Californians have been affected by increasing premiums or have been dropped by their insurer in the last year.
The discontinued policies are for ‘dwelling fire insurance,’ which covers fire damage to the structure of a home, not the belongings inside. Dwelling fire policies are commonly bought by landlords or vacation homeowners. The decision to not renew policies has left policyholders, such as San Francisco resident Beth Brown, feeling blindsided and comparing it to a breakup with no explanation.
California has been experiencing an increase in wildfires, with the Park Fire consuming over 429,000 acres and damaging hundreds of structures. As insurers like Liberty Mutual withdraw from the market, property owners across the state are facing significant premium hikes. Even urban areas like West Hollywood are not exempt, with one condo building seeing a 400% increase in annual insurance premiums. As a result, some properties are forced to seek coverage from non-California admitted companies.
In conclusion, Liberty Mutual’s decision to discontinue fire insurance for thousands of policyholders in California highlights the challenges insurers face in a state plagued by climate disasters. The move reflects a broader trend of insurers limiting or stopping business in California, leading to rising premiums for property coverage and leaving property owners scrambling for adequate insurance options.
