Farmers Lifts Homeowners Policy Cap in California
Farmers, a major insurer, recently lifted its cap on homeowners insurance policies in California.
With the threat of wildfires and other recent disasters, many homeowners in the state are struggling to obtain comprehensive coverage at an affordable rate.
Some insurers have backed out, while others, like State Farm, have requested price hikes. Overall, the unstable market has created an “insurance crisis,” leaving homeowners vulnerable.
The recent shift could mean a break for policyholders and signal change within the insurance industry.
However, it’s not as straightforward as it seems. The state has been working for years to stabilize its private insurance market, and not every resident is happy with the changes.
Here’s what California homeowners need to know about how the change made by Farmers could impact the insurance market.
Why Were Policies Limited?
Many insurers place caps on the number of new policies they issue.
Since July 2023, Farmers has restricted the amount of new homeowners insurance policies it issues in California. The cap was limited to 9,500 polices per month.
The cap wasn’t put into place for no reason. The rise of costly disasters in the area makes it risky to insure properties in the state.
Some of the reasons insurers limit policies in California include:
- Increased frequency and severity of wildfires and other extreme weather
- Soaring construction costs, including materials, labor, and other expenses
- Record inflation and rising reinsurance costs
The rising costs made it unsustainable for insurers to write new policies at regulated rates. Under Proposition 103, insurance companies need approval from the California Department of Insurance before implementing rate increases.
The law was created to protect homeowners and ensure fair, affordable rates. It allows consumer advocates to intervene and challenge rate hikes before premiums are raised.
However, insurance companies are a business, and most companies’ top priority is to protect their bottom line. The cap was created as a way for insurance companies to manage losses until the market stabilized.
And it was homeowners who paid the price. With the restriction in place, some homeowners struggled to obtain new coverage at all, while others were left with fewer choices and premium increases. With limited options, some buyers were driven to obtain policies from California’s FAIR Plan, the state’s insurer of last resort, which offers limited coverage at higher costs.
The unstable market created fear and uncertainty, leaving millions of California residents anxious about maintaining coverage.
What Does The Lifted Cap Mean For Homeowners?
As of November 2025, Farmers announced that it will lift the cap on new homeowners insurance policies.
This change could signal a positive shift within the California insurance industry.
In a press release, President of Personal Lines for Farmers Insurance Behram Dinshaw explained the decision:
“By removing the cap on offering new homeowners policies, Farmers is doubling-down on its commitment to California homeowners, expanding choice and availability for consumers across the state.”
The company cited its expectation for an improved California homeowners insurance market under Commissioner Ricardo Lara’s Sustainable Insurance Strategy as its reason for lifting the limit.
According to Realtor.com, Insurance expert Karl Susman predicts this could be a postive sign:
“This will put enormous pressure on the rest of the industry, because they don’t want to lose out on the business that Farmers is now going after—which means options will increase and hopefully prices will eventually decrease.”
However, those changes will likely take a long time. Economic researchers warn that the risk environment hasn’t improved enough to keep up with lower premiums.
How Is The California Insurance Market Changing?
The new rating plan put out by Farmers also includes efforts to adapt some parts of the Sustainable Insurance Strategy.
It would see the insurer add thousands of new policies in areas identified as distressed by the California Department of Insurance.
The Sustainable Insurance Strategy was created in 2023 as part of California Governor Gavin Newsom’s call to solve the home insurance crisis. Insurance Commissioner Ricardo Lara oversees the multi-part initiative to stabilize the market.
Some of the goals the Sustainable Insurance Strategy aims to achieve include:
- Modernizing regulations
- Streamlining rate approvals
- Fortifying the market for the changing climate
- Making coverage more accessible and affordable
- Incorporating future risk modeling
- Encouraging wildfire mitigation
- Reducing reliance on the state’s FAIR Plan
- Establishing a more resilient insurance market
The major objective of the plan is to prevent insurance carriers from continuing to withdraw from the high-risk state.
Nevertheless, implementing the strategy has been turbulent so far. Some victims of the Los Angeles wildfires even called for Lara’s removal after a New York Times article revealed that the commissioner had made a deal with insurers that enabled them to drop policyholders in exchange for future rate hikes prior to the fires. This agreement allowed insurers to drop tens of thousands of policyholders ahead of the LA fires, leaving homeowners vulnerable in the face of disaster.
The changes made by Farmers, however, could signal a shift in the insurance market. Farmers’ cooperation with the state’s plan could set the lead for other insurers to follow, offering a positive change for homeowners.
With the policy cap removed, more people will be able to purchase insurance plans, meaning fewer California residents will have to rely on the state’s insurer of last resort. Likewise, those in vulnerable areas may finally be able to obtain much-needed coverage for their homes.
Navigating Your Insurance
Despite the recent changes, it’s still important for homeowners to be proactive about their insurance plans.
Smart homeowners should research options and read their insurance contracts carefully to make sure they understand their coverage.
Having the right protection today could be the difference between a successful claim and a devastating loss in the event of a disaster.
If you are struggling with a complicated insurance claim, consider hiring a public adjuster. Public adjusters are licensed insurance professionals who advocate on your behalf and fight for better settlements.
They’ll help you present your claim, negotiate with insurers, and achieve a better outcome.
Ironside Claims’ public adjusters have years of experience handling smoke, fire, and other property damage claims. Schedule a free consultation today to see how a public adjuster can help with your claim.