The financial impact of California's wildfires is expected to surpass $20 billion, prompting insurance companies such as State Farm to withdraw homeowner policies in New Jersey. This trend reflects a broader national strategy by the insurance industry to manage risk.
Environmental advocate Doug O'Malley described the situation as "a game of Jenga," where extreme weather events could destabilize regional markets. He emphasized that New Jersey is not isolated from the effects of climate change impacting other states like California, contributing to rising home insurance rates in New Jersey due to increasing climate-related disasters nationwide.
Clinton Andrews, director of the Center for Urban Policy Research at Rutgers University, shared his personal experience with changing insurance providers. "I have a house on the Shore and I was told, sorry we are dropping you from one insurance company. But in the same letter, they said luckily we found another company who wants to take over your policy," he recounted.
A recent study identified three counties in New Jersey—Cape May, Atlantic, and Hudson—as among the top 100 nationwide for significant increases in non-renewal rates by insurers between 2018 and 2023.
Andrews explained that insurers typically respond first by raising prices. If further price increases are not viable or due to regulatory constraints, they may exit a market entirely. He warned that California's situation serves as an alert: “Their insurance market is about to be broken. And there’s just too much for the private companies to handle in terms of the risk.”
