An Allstate spokesman said the move was to help control its catastrophe exposure in the state, which is prone to wildfires and earthquakes.
The move will not affect current customers, nor will it affect auto insurance. Allstate agents in the state will continue to work with customers, but will offer new homeowners customers insurance through partner Pacific Specialty Insurance Co.
Northbrook, Ill.-based Allstate and other homeowners insurers have had a contentious relationship with insurance regulators in the state over homeowners insurance prices.
Though several large insurers cut prices in the state lately, Allstate in September asked for an average 12 percent increase. The request is still pending.
The spokesman said the move to stop writing new policies in California was not driven by insurance rates, but was purely a move to limit its exposure to catastrophe.
Allstate has already tightened its standards for writing coverage in the state, one of its largest in terms of customers, and has already stopped offering earthquake insurance.
In the first quarter of 2007, Allstate said it wrote 11,000 new homeowners policies in California, a drop from the 16,000 it wrote in the first quarter of 2006, the spokesman said.
Allstate has also trimmed coastal exposure in other states that are prone to natural catastrophes. Allstate has also stopped writing new homeowners policies in Connecticut, Delaware, Florida and New Jersey as well as in eight coastal New York counties.