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Liberty Mutual cuts fire insurance for thousands in at-risk state - blaming tech issues
Liberty Mutual is discontinuing its fire insurance for around 17,000 policyholders in California.
Liberty Mutual Fire Insurance Company, a subsidiary of the major insurer, is in the process of canceling the cover, which will be completed in November.
California is in the midst of a crisis which is seeing increasing numbers of insurers flee the state.
But rather than blaming losses, Liberty Mutual said technology issues were the reason for the non-renewals.
The company said it is 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,' The San Francisco Chronicle reported.
The policies are for 'dwelling fire insurance,' which is different to a typical homeowners policy.
Liberty Mutual is discontinuing its fire insurance for around 17,000 policyholders in California (Pictured: The Park Fire burns in Tehama County on August 7)
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.
The old technology is being retired across the company, which is also affecting policyholders in other states, a company spokesperson told the SF Chronicle.
San Francisco resident Beth Brown was told by Liberty Mutual in March that the fire insurance for her property would not be renewed.
Brown, who had been with the insurer for decades, told the outlet she makes frequent renovations to her home to keep it up to date.
The nonrenewal was 'sort of like a boyfriend who breaks up with you and can't really tell you why,' she said.
Liberty Mutual, through several subsidiaries, made up just shy of 10 percent of California's fire insurance market.
It comes as a growing list of companies have limited or stopped doing business entirely in the Golden State - many citing the intensifying risk of climate disasters.
As a result, over half of Californians say they have been affected by rising premiums for property coverage or have been dropped by their insurer in the last year, according to stark data from Redfin.
In July and August, the Park Fire, which started when a burning car was pushed into a gully, has consumed over 429,000 acres.
The blaze, which is the fourth-largest wildfire in state history, has now damaged over 700 structures and damaged 54 more.
As of July this year, more than 3,500 wildfires had eaten up at least 219,247 acres across the state, according to California fire officials.
The company said it is 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'
A growing list of companies have limited or even stopped doing business entirely in the Golden State - many citing the intensifying risk of climate disasters (Pictured: Blue Ridge Fire in 2020)
The typical annual premium for Americans will rise to $2,522 by the end of 2024, according to predictions from insurance comparison platform Insurify
Jeff Waack said he 'nearly fell of his chair' when he saw how much the insurance premium had risen this year for a West Hollywood condo building
Rising premiums for property insurance are affecting residents across the state, even those who are not in high fire risk areas.
Jeff Waack, the board treasurer for a condo in West Hollywood, told DailyMail.com earlier this year how the annual cover for the building has increased 400 percent this year from approximately $23,000 to $116,000.
'Our management company sent out proposals to 12 different insurance companies this year and every single one declined to give us a policy,' he said.
West Hollywood is an urban area, and is not at particular risk of wildfires, hurricanes or flooding, Jeff added.
He has lived in the building for decades, and says the last claim he remembers the board filing was 18 years ago.
As a last resort, the condo was forced to take coverage from a non-California admitted company, which means it sells policies which are not backed by the state.