State Farm vs. California Homeowners
For the past several years, California has been besieged by some of the worst wildfires in the state’s history. In 2018, the Camp Fire, the deadliest and most destructive wildfire in the history of California, destroyed 11,000 homes, resulting in the deaths of 85 people and displacing nearly 50,000 more.
The Camp Fire proved to be the most expensive natural disaster to occur in the world during 2018 in terms of insured losses. In its aftermath, insurance companies suffered huge losses, the result being an increase in cost of premiums and a stiffening of eligibility requirements needed to purchase coverage.
On May 26, State Farm Insurance, the leading company providing homeowners insurance in California, made headlines when it announced it will no longer accept homeowner insurance applications in California, the reason cited being the growing risk from catastrophic wildfires and other natural disasters.
What’s really happening
The decision to forgo coverage went into effect at the end of May and applies to personal and business properties. The company announced that it will continue serving existing customers and will not accept any new policies for homeowner’s insurance.
State Farm vs California Homeowners is just the latest development which, for years, has been an issue in California: insurance companies dropping homeowners due to the growing risk of wildfires.
After the devastating fires of 2017 and 2018, the number of California residents who were informed by their insurer that their existing policies, when renewed, would be increased.
According to Harvey Rosenfield, founder of the advocacy group and author of Prop 103, any refusal on the part of insurers to write new policies will affect the rates homeowners pay.
What this means for your estate plan
The current situation concerning State Farm vs. California Homeowners has implications when it comes to your estate plan.
Perhaps you plan to leave your house to a relative after your death. Putting a house in a trust makes it possible to transfer it to a beneficiary without having to go through probate. You will need to transfer the deed into the name of trust. This way the existing homeowner’s policy will also transfer with the house to your heirs.
For this and other issues dealing with trusts, speak with an experienced estate planning attorney to answer all the legal questions you have concerning trusts.