Major Insurance Affiliate Drops 100,000 Customers in California

Chris Cott was shocked when he received a letter from his insurance company, Farmers Direct Property and Casualty Insurance.

The letter stated that his auto insurance would not be renewed in May because the insurer no longer offers insurance in California. Cott, like many others, was left puzzled and without answers.

Farmers Direct, an affiliate of Farmers Insurance, is shutting down its operations in California, leaving around 100,000 customers in limbo. The closure has caught many off guard, including Cott, who likened the situation to starting over after a divorce.

The decision to shut down the branch is said to be aimed at increasing operational efficiency and managing risk exposure, according to Farmers Insurance. However, industry experts suggest that there may be more to it.

Steve Young, from the Independent Insurance Agents And Brokers of California, highlighted the challenges faced by auto insurance companies in the state.

With more people driving again post-pandemic, insurance claims have surged, making it tough for companies to raise policy rates due to California’s strict regulations.

While California’s State Insurance Commissioner pointed out that residents pay less on average for auto insurance compared to other states and mentioned the availability of other insurance companies, customers like Cott are left feeling stranded.

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Farmers Insurance advises Farmers Direct customers to contact them for assistance, while other Farmers Insurance customers should reach out to their local agents. Those facing difficulties can also seek help from the Department of Insurance.

In the midst of this unexpected change, affected customers like Cott are left searching for new insurance options as they part ways with Farmers Direct.