State Farm will offer insurance renewals to Los Angeles residents it had planned to drop.

In a major U-turn, the company said it would renew policies in the badly-hit Pacific Palisades neighborhood, alongside thousands more in Los Angeles county.

However, the offer does not apply to policies that had already lapsed when the deadly fires started on January 7. 

State Farm said in March that it would stop offering insurance to 72,000 homes across California, blaming the risk of natural disasters and the impact of inflation.

The Department of Insurance said that among the policies that the company had targeted for nonrenewal, more than 7,600 were in the Palisades fire zone.

State Farm - the leading home insurer in California - said around two-thirds of the policies it had planned to cancel were still active when the fires began. 

Customers can now renew these if they wish - rather than hunt for a new and likely costlier replacement provider.

Although the decision to cut policies was made last year, it faced renewed scrutiny when the news resurfaced as the wildfires wreaked havoc across LA. The fires have damaged or destroyed more than 12,000 structures and claimed over two dozen lives.

In fact, California insurance commissioner Ricardo Lara urged coverage providers last week to suspend pending non renewals in the Palisades and Eaton fire zones.

State Farm made the U-turn on Wednesday, a move first reported by The LA Times.

Lara's office said he was in talks with State Farm to get more details about what the change of policy means for residents.

'All eyes are on insurance companies right now, including mine,' Lara said in a statement Wednesday in response to State Farm's decision. 

'We are going to keep working to make sure everyone's claims are paid fairly, quickly, and completely.'

A day later, State Farm spokesperson Bob Devereux said: 'This decision reflects our commitment to supporting our customers and goes beyond the department of insurance's request.' 

Policyholders in the fire zones would get an offer for a one-year renewal, the company said.

Those with total losses, meanwhile, would get renewals for two years, as is required by law.