Liberty Mutual to pull out of California condo, rental insurance markets
December 20, 2024
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Even as regulators phase in new reforms to stabilize California’s faltering home insurance market, Liberty Mutual plans to drop all its condo and rental policies statewide starting in 2026.
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Ahead of the move, Safeco, a Liberty subsidiary, is preparing to stop writing new condo and rental policies at the beginning of next year. Liberty hasn’t accepted new condo or rental customers under its parent brand since late 2023.
Liberty, the seventh-largest property and casualty insurer last year, currently covers more than 67,000 condos and 102,000 rental properties across the state, according to rate filings. It’s unclear how many policyholders could lose their insurance in the Bay Area.
A spokesperson for the company said Safeco will continue writing new homeowners insurance policies in California. But the Liberty brand, which stopped adding homeowner policies in the state last year, does not plan to resume that coverage.
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Liberty is one of a number of insurers to scale back their presence in the state as providers have incurred billions of dollars in losses following recent devasting fire seasons.
“During this time of increasing risk and volatility, we are building a sustainable business path forward in California by simplifying our product offerings and investing in the areas where we can win in the long term,” the Liberty spokesperson said in a statement.
Since 2017, insurers have also dropped hundreds of thousands of policyholders in high-fire areas such as the East Bay Hills, Wine Country and the Santa Cruz Mountains. Homeowners unable to find traditional policies have been left to buy into the exorbitantly expensive FAIR Plan, the state’s insurer of last resort.
Meanwhile, as carriers including Liberty, Allstate and State Farm have stopped writing new home insurance policies, the lack of competition has likely contributed to premiums spiking across California.
Liberty’s move to exit the condo and rental markets comes despite a new plan by state regulators to reduce non-renewals and entice insurers to accept more customers.
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This month, California Insurance Commissioner Ricardo Lara announced the state has finalized the key component of the proposal: allowing insurers to justify rate hikes based on the growing threat of climate change, a long-running industry demand. In exchange, companies must work to expand coverage in parts of the state with the greatest wildfire risk.
Earlier this week, Farmers Insurance announced it would increase the number of new California homeowners policies it writes each month from 7,000 to 9,500, explaining that “the state’s insurance marketplace has indeed improved.” In April, Allstate said it would consider resuming writing new homeowners policies in California.
Consumer advocates, however, worry the new regulations will mean steep rate hikes for many policyholders. They also remain skeptical that most insurers will write more policies in fire-risk areas and elsewhere in the state.
“Liberty Mutual’s announcement shows that Commissioner Lara’s plan does not require insurers to sell again in California,” said Carmen Balber, executive director of Consumer Watchdog, arguing that policyholders who take proactive steps to safeguard their homes from wildfires shouldn’t be struggling to find coverage. “To make sure Californians are covered, we need a mandate that insurers sell to firesafe properties.”
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