State Farm exited California apartments — here's what owners should do now

In March 2024, State Farm announced it would not renew approximately 72,000 California property policies, including roughly 42,000 commercial multifamily policies — buildings with five or more units. The non-renewals took effect August 20, 2024. For the remaining commercial multifamily policies that State Farm chose to keep, the carrier filed for rate increases of up to 38%, taking effect on renewals starting June 2025.

State Farm was not alone. Earthhh's 2025 California Multifamily Insurance update documented parallel pullbacks from Hartford, Travelers, and Nationwide on California habitational risk. The combined effect is that the admitted market — meaning standard, state-regulated, A-rated carriers — has narrowed dramatically for California apartment buildings. For most mid-size SoCal apartment placements today, the question is no longer 'which admitted carrier do we use' but 'are we going E&S, FAIR Plan plus DIC, or do we have a rare admitted option?'

If you own a California apartment building of five units or more and you received a non-renewal notice in the last 24 months — or you're heading into a renewal in the next 90 days — the placement landscape you remember from 2019 is gone. The good news is that the new landscape has a logic to it, and the carriers writing the business today are stable, just less familiar.

The exit was not a coincidence. Three structural pressures hit California habitational at the same time.

First, wildfire severity. The January 2025 Palisades and Eaton fires caused $10B–$45B in insured losses depending on the source (Coverage Cat and Milliman track the high and low ends). These were the #2 and #3 most destructive California wildfires on record, and they came on top of a multi-year run of major fire events. Reinsurance treaties — the wholesale market that backs primary insurers — repriced California catastrophe coverage aggressively through 2024 and 2025.

Second, structural water damage frequency in older apartment stock. The Federal Reserve's September 2025 FEDS Notes explicitly flagged 40+ year old US apartment buildings (the national median age) as the single largest driver of admitted-carrier retrenchment from multifamily. California, with a large pre-1978 wood-frame and joisted-masonry stock, sits squarely in that exposure profile.

Third, California's Prop 103 rate-approval regime. Prop 103 requires the Department of Insurance to approve rate increases before they take effect, and historically the approval process moved slowly. The December 2024 'Net Cost' rule changed that — it allows insurers to pass reinsurance costs through for the first time, and carriers project 40–50% additional premium impact at the high end. The reform helped, but several carriers had already made strategic decisions to exit before it was finalized.

If you own a California apartment building of five units or more, your placement falls into one of three buckets. Knowing which bucket applies to your property tells you what to expect on price, coverage, and renewal cycle.

Option 1 — Admitted carrier (rare). A handful of standard carriers still write California apartments selectively. The qualifying profile is narrow: post-2000 construction, masonry or concrete (not wood frame), no wildfire exposure (low or no FHSZ designation), no losses in the last five years, owner-managed or professionally managed with documented maintenance, and typically 10–50 units. If your building fits, the admitted market is still the cheapest option — frequently $800–$1,200 per unit per year for property plus general liability in Orange County, per Earthhh's Q1 2025 data showing an OC average of approximately $1,088/unit/year. The placement is stable, claim handling is professional, and the policy is backed by the California Insurance Guarantee Association if the carrier ever fails.

Option 2 — Excess & Surplus lines (typical). For most mid-size SoCal apartment buildings — older construction, mixed loss history, or any wildfire exposure — the placement goes to the E&S market. E&S carriers (Lloyd's syndicates, AmTrust, Western World, Scottsdale, RSUI, and dozens of others) are not regulated for rate by California; they price freely and underwrite case-by-case. AmWINS' H1 2025 Property Update reported that E&S property has actually been softening as new capacity enters the market, with layered accounts being subscribed at 150%–200%+. Expect to pay 20–40% more than an admitted policy on the same building, but coverage breadth can be excellent and the carriers are stable. The trade-offs: no California Insurance Guarantee Association backstop, no Prop 103 rate protection, and minimum-earned premium provisions are more common.

Option 3 — California FAIR Plan plus DIC wrap (wildfire-exposed). If your building sits in a high or very-high Fire Hazard Severity Zone and no admitted or E&S carrier will write the fire coverage, the FAIR Plan becomes the fire insurer of last resort. FAIR Plan is fire-only, so you need a Difference-in-Conditions (DIC) wrap to cover theft, liability, water damage, and the other perils a complete policy needs. The FAIR Plan commercial limit was expanded in July 2025 to $20M per building / $100M per location, with that expansion sunsetting in 2028. The FAIR Plan also received a +29.1% rate increase approved in October 2025, taking effect on renewals after April 1, 2026. Wildfire-exposed SoCal apartments commonly land at $2,000–$3,500+ per unit per year in this configuration.

California requires 75 days' written notice of non-renewal on a commercial policy. That sounds like a lot of time. It isn't — most apartment placements in 2026 take 30 to 60 days to complete, and the worst quotes come from rushed submissions.

Step 1 (week 1): Pull your full loss runs from the current carrier — five years of detail, not the summary. Get a current statement of values listing every building, square footage, year built, construction class, roof age, and protection class. Get your most recent inspection report if one was done. These three documents are 80% of what any new carrier will ask for.

Step 2 (week 1): Verify your construction classification. There are six standard commercial property construction classes (frame, joisted masonry, non-combustible, masonry non-combustible, modified fire-resistive, fire-resistive). Most pre-1970 SoCal apartment buildings are either frame (most expensive) or joisted masonry (mid-range). Carriers price construction class very differently. A building incorrectly classified as frame when it's actually joisted masonry pays 1.5–2x more than necessary for property coverage. This is a verifiable, contestable input.

Step 3 (weeks 2–4): Submit to the broader market. Don't accept the first quote. Modern SoCal apartment placements typically run through E&S brokers who shop 8–15 carriers in parallel. Expect a 7–14 day quote turnaround on a clean submission, longer if your loss history needs explanation.

Step 4 (weeks 4–8): Compare quotes line by line. The cheapest premium is not always the right policy. Watch for these gotchas: minimum-earned premium (some E&S policies require you to pay a percentage even if you cancel mid-term), claims-made vs. occurrence GL forms, vacancy permits, sublimits on water damage, ordinance & law coverage limits, and earthquake exclusions vs. earthquake sublimits. A $2,000 cheaper premium with a $50,000 lower ordinance & law sublimit is not a savings.

The carriers that didn't exit have been recalibrating too. Even if you're with a stable admitted carrier, expect rate movement at renewal. The Federal Reserve's analysis put national multifamily per-unit insurance costs at $39/month in 2019 and $68/month in 2024 — a +75% real-terms increase over five years. California specifically was flagged as one of the elevated regions in that data.

Matthews Real Estate Investment Services reported Los Angeles multifamily premiums surging 30% year-over-year in 2024. CoreLogic-cited data shows California commercial property premiums rose 45% cumulatively from 2018 to 2024. The 2026 outlook depends on how 2025–2026 wildfire and water-damage loss experience develops, but the consensus across reinsurance and primary carrier filings is for continued upward pressure, not a return to 2019 pricing.

What you can control: deductible structure (raising the wind/hail and water-damage deductibles can recover 5–15% on premium), construction class verification (above), loss-control investments (sprinkler upgrades, sub-meter water leak detection, fire extinguisher inspection records), and the brokerage relationship itself. Carriers price differently based on the broker's relationship and submission quality. A clean, complete submission from a known broker beats a sloppy submission from a captive every time.

Using Earthhh's Q1 2025 Orange County average of approximately $1,088 per unit per year, a 20-unit modern OC apartment building runs roughly $21,760 in admitted-market property plus GL premium. That's the baseline.

Add 20–40% for older construction (pre-1978 wood frame). Add 20–40% if the placement goes E&S instead of admitted. Add 30–100% for prior water claims or wildfire-zone exposure. Add $2,500–$6,000 for a $5M umbrella. Add 25–60% of the base property premium for earthquake (DIC).

A typical 20-unit OC building in 2026 lands between $25,000 and $55,000 per year on a full program including umbrella, with earthquake adding another $4,000–$12,000 on top. Wildfire-exposed buildings in FAIR Plan plus DIC can run $40,000–$70,000 per year for the same unit count. These are not abstract numbers — they directly compress NOI and affect debt-service coverage on every mortgaged building in the state.