Weekly Real Estate News
Summary
State Farm and Allstate have filed plans that could reopen limited new homeowners insurance business in California after years of pullbacks. Neither company is broadly accepting new homeowners applications yet; the filings remain subject to state review, and State Farm's approach ties eligibility to wildfire-resilience standards.
Two of the biggest names associated with California’s retreat from homeowners insurance are moving—cautiously—in the opposite direction.
State Farm General and Allstate have filed plans that could allow them to resume writing some new homeowners policies in California after years of restrictions, according to the California Department of Insurance and company filings reported this week.
The development is potentially significant for homeowners, buyers, lenders and real estate professionals in a state where obtaining property insurance has become part of the transaction risk. But the word potentially matters: neither insurer has broadly reopened for new homeowners business, and the filings remain subject to regulatory review.
State Farm’s proposal is the more targeted of the two. The company filed updated underwriting guidelines that would allow it to consider applications from homes carrying qualifying Wildfire Prepared Home designations from the Insurance Institute for Business & Home Safety.
Homes meeting the higher designation could be considered statewide if they also satisfy State Farm’s normal underwriting standards. Homes meeting a lower designation could be considered in areas with lower wildfire severity. A designation would make a property eligible for consideration; it would not guarantee coverage.
A reversal from the crisis years
State Farm stopped accepting new homeowners applications in California in 2023, citing catastrophe exposure, construction costs and reinsurance conditions. Allstate had stopped writing new homeowners policies in the state in late 2022.
Those decisions became defining moments in California’s insurance crisis. Homeowners in wildfire-exposed areas increasingly turned to the California FAIR Plan, while insurance availability began affecting home purchases, escrows and mortgage closings.
Insurance Commissioner Ricardo Lara has spent the past several years implementing the state’s Sustainable Insurance Strategy, which gives insurers additional tools to reflect catastrophe modeling and reinsurance costs in rates while seeking commitments to expand coverage in distressed areas.
The Department of Insurance has pointed to recent filings from multiple carriers as evidence that availability may be improving. Farmers, Mercury, CSAA, USAA, Liberty Mutual, Travelers and other insurers have announced plans to stay or grow in parts of California.
State Farm and Allstate are especially important because of the symbolic weight of their earlier pullbacks. Their return would not, however, mean California’s insurance problem is solved.
The fine print matters for home sales
State Farm’s approach links new-business eligibility directly to wildfire mitigation. That could make home hardening more economically important to sellers and homeowners if insurers increasingly use third-party resilience standards when deciding which properties they will consider.
For real estate professionals, that creates a new diligence question. A home’s roof, vents, vegetation clearance and other wildfire-resilience features can affect more than physical risk; they may increasingly affect access to conventional insurance.
Allstate’s filing is also under review. Public reporting on the filing indicates the company proposed a limited initial return tied to its Sustainable Insurance Strategy filing. WRE is not treating the proposed policy count or rate terms as approved because state regulators have not completed their review.
That distinction is important in a market where a headline saying an insurer is “back” can easily get ahead of what consumers can actually buy.
California’s market is improving—but remains fragile
The broader evidence is mixed but more encouraging than it was during the peak of insurer withdrawals. The Department of Insurance said earlier this year that FAIR Plan growth had slowed sharply and that a growing list of insurers had committed to expand availability.
At the same time, hundreds of thousands of Californians continue to depend on the FAIR Plan, and affordability remains a separate problem from availability. A homeowner who can obtain a policy may still face substantially higher premiums than several years ago.
For housing, the meaningful test is not how many insurers file plans. It is how many homeowners can actually obtain adequate coverage at a price that allows a transaction to close.
State Farm and Allstate moving toward new business is therefore a real change in direction. It is not yet a return to the pre-crisis insurance market. Regulators still have to review the filings, insurers still control underwriting within approved rules, and California homeowners will ultimately judge the shift by whether more properties become insurable in practice.
