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At a time when Californians face increasing risks from wildfires, rising medical costs, and ongoing litigation, the state’s largest insurer, State Farm, is now withdrawing critical protections—leaving policyholders exposed when they need coverage most.

In a recent move, State Farm has announced a sweeping list of disqualifying traits and activities that make policyholders ineligible for its California Personal Liability Umbrella Program, a type of policy that offers at least $1 million in extra protection. The exclusions now include everyday situations, such as homeowners who have filed just two claims in five years. So, filing for smoke, water, or storm damage, risks that are increasingly common in California due to extreme weather and wildfires, can now put ordinary homeowners at risk of losing essential coverage for routine events.

For many, these umbrella policies are not luxuries, they serve as a lifeline and essential safeguard. Removing access to this level of protection leaves countless individuals and families at risk of financial devastation.

A Widening Pattern of Bad Faith in the Insurance Industry

State Farm’s shift doesn’t stand alone. They're part of a broader industry trend where insurance companies are tightening coverage, hiking rates, and leaving policyholders behind, often without reasonable cause.

During wildfires like the Palisades and Eaton fires, homes were severely damaged or destroyed. Homeowners, already traumatized, were forced to seek alternative options like the California FAIR Plan. Yet this "last resort" plan often comes with significant gaps—including refusing to cover toxic ash and soot damage that can make homes uninhabitable.

As insurers scale back, law firms like Singleton Schreiber are fighting to hold them accountable. We aim to reverse this disturbing trend and restore meaningful coverage to California families.

What’s Really Driving This?

State Farm cites rising legal settlements, larger jury verdicts, and escalating medical costs as part of its reasons for restricting eligibility and requesting a nearly 39% rate increase for umbrella policies. But let’s be honest: this is not just about risk. It’s about protecting profits. In a world where corporations post billions in revenue, insurers are pushing more risk onto policyholders while continuing to request major rate hikes. Consumers are being left to shoulder the burden alone while simultaneously dealing with the grief of the situation.

Let’s not forget that just this May, State Farm secured a temporary 17% homeowners insurance rate hike, with another 11% increase pending. If the risks are so untenable, why continue conducting business in California at all? Well, insurers want to cherry-pick customers while offloading the risk onto the rest of its consumers, or worse, onto the legal system. When insurance companies like State Farm back away from offering coverage, everyday Californians are left more vulnerable. Who pays when someone gets hurt on a corn maze or at a pick-your-own orchard? Without umbrella coverage, it may be the small business owner who goes bankrupt, or the injured person who never gets fairly compensated.

A Wake-Up Call for California

State Farm’s decision is a wake-up call. We cannot allow insurers to scale back coverage while simultaneously lobbying to limit victims’ rights through tort reform. Insurers can reduce their exposure by doing the right thing—fairly and honestly administering claims. We will continue to hold insurers accountable for their misconduct. Homeowners in fire-prone zones, small business owners, and families alike deserve robust, reliable protection.

If you're a policyholder in California, now is the time to review your coverage. Talk to your agent. Ask the hard questions. And if you find yourself unfairly denied coverage or denied justice, know that you have legal recourse. Because at the end of the day, protecting our communities shouldn't be "too risky." It should be non-negotiable.

Singleton Schreiber understands the devastating consequences of being denied insurance coverage. Our experienced attorneys are dedicated to fighting for policyholders who have been dropped, excluded, or unfairly denied claims. Singleton Schreiber’s team works to ensure that individuals receive the full protection and compensation they are entitled to.

If you or a loved one has been impacted by an unforeseen change in your insurance policy, our firm is ready to stand by your side, providing expert legal guidance and representation. Contact Singleton Schreiber today to learn more about your options.

Call us at (619) 771-3473 to get started with a free consultation today.