State Farm will not renew more than 70,000 insurance policies over the next year.
The company said the move would affect 2% of its total policies in California.
Those impacted will be notified this summer.
"This decision was not made lightly and only after careful analysis of State Farm General's financial health, which continues to be impacted by inflation, catastrophe exposure, reinsurance costs, and the limitations of working within decades-old insurance regulations," the company said in a written statement.
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This all comes after record-breaking wildfire seasons in 2017 and 2018.
Those fires caused huge losses for the insurance industry across the state.
Because of that, major insurers, like Allstate, have stopped accepting new applications.