Safeco to Drop 1,000 Homeowners Policies in SF and the East Bay

Safeco Insurance, concerned about earthquake risk in San Francisco and the East Bay, will soon send shock waves across the region by canceling coverage for nearly 1,000 homeowners.

The Seattle-based arm of Boston-based Liberty Mutual Insurance plans to drop more than 950 policies in the Bay Area when they come up for renewal in October, the San Francisco Standard reported, citing a filing with state insurance regulators.

The move comes after State Farm and Allstate halted new business in California and Farmers Insurance put a cap on policies. Last week, Liberty Mutual also announced it would cease providing business coverage this year across the Golden State.

While the shrinking market makes it difficult for Californians to insure their homes and businesses, the latest policy by Safeco specifically targets west and southern San Francisco, Alameda, and much of Oakland and Berkeley.

Because of the Bay Area’s “significant earthquake risk and the resulting home fires they cause, and our high concentration of insurance exposure, we have taken the difficult but necessary step to further reduce our overall book of business through underwriting decisions on new and renewal homeowners policies,” a Liberty Mutual spokesperson told the Standard in an email.

“This decision impacts approximately 1 percent of our California homeowners business.”

The California Department of Insurance said the rule change does not require its approval.

Safeco has long had areas in San Francisco where it would not insure homes, according to Richard Reinholdt, an independent insurance agent who worked with the company until his contract was terminated last week.

“We knew half the zip codes were already closed,” he told the Standard. “They didn’t want to be overly concentrated.”

The regulatory filing expands the regions where Safeco will generally shun new business, while identifying 30 zip codes where it will drop some policyholders. It will not apply to policyholders who have been continuously insured with Safeco since Jan. 1, 2000.

“There’s no question that we’re in a crisis in regions of the state,” Amy Bach, who leads United Policyholders, a San Francisco-based nonprofit that advocates for insurance consumers,

told The Standard. “What’s disturbing is that this is the Bay Area.”

— Dana Bartholomew