Major insurance company to drop all condo policies in California

Major insurer Liberty Mutual is dropping all its condo policies in California, it has announced. 

The company, which is the fourth-largest home insurer in the state, has told regulators that it will stop offering new condo and renter policies next year.

Existing policyholders will then see their coverage axed in 2026, according to filings with the California Department of Insurance.  

'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,' a spokesperson told the San Francisco Chronicle. 

It comes as several large insurers have fled the state amid worsening climate disasters, leaving many people struggling to find home cover. 

Over half of Californians said earlier this year that they had been affected by rising premiums for property coverage or had been dropped by their insurer entirely.

Wildfires are becoming increasingly common across California, and have burned more than 1 million acres of land this year so far. 

Filings show Liberty Mutual currently insures just under 67,500 condos and about 102,200 rental properties under its Liberty Mutual and Safeco brands, according to the San Francisco Chronicle.

In 2023, the insurer covered 6.75 percent of the California home insurance market, according to the outlet, but it has not written new condo and rental policies under the Liberty Mutual brand since December 2023. 

In August, the company also said it was discontinuing its fire dwelling insurance for around 17,000 policyholders in the state.

Rather than blaming losses, however, Liberty Mutual said technology issues were the reason for the non-renewals.

The company said it was retiring the 'antiquated' technology it uses to manage the policies, 'and it is not feasible to create a new system to support this product in California.'

Dwelling fire insurance is different to a typical homeowners policy. The main purpose of the coverage is to cover fire damage to the structure of a home itself, rather than for the belongings inside. 

Dwelling fire policies are often bought by people who do not live in their homes full time, such as landlords or vacation homeowners.

In the latest state filings regarding the condo and renter policies, Liberty Mutual said it expects its agents to help affected customers find new coverage.

All existing customers will remain covered until at least January 2026, it added. 

It comes as regulators in the state are phasing in reforms to help stabilize the insurance market, which many fear has tipped into a crisis. 

As major companies such as State Farm have cut back in the state, this has led to a lack of competition.

Labor shortages and higher fees for home repairs have also been pushing up prices for homeowners in the state.

And some Americans unable to find cover have been forced to buy into the expensive FAIR plan, which is California's insurer of last resort.  

This month, California Insurance Commissioner Ricardo Lara announced the state will allow insurers to justify rate hikes based on the growing threat of climate change, a long-running industry demand, The Mercury News reported.

In exchange, companies must try to expand coverage in parts of the state with the greatest wildfire risk. 

Farmers Insurance announced earlier this month that it would increase the number of California homeowners policies it writes each month, saying that the marketplace has 'improved.'

However consumer advocates are concerned the new regulations could mean many policyholders see sharp rate hikes, according to the outlet.