Aug 12, 2008 5:58 pm US/Eastern
State Farm Asks For Rate Hikes, Less Policies
The Largest Private Homeowners' Insurer In Florida, State Farm Has 1-Million Customers In The State
TALLAHASSEE (CBS4) ―
It's not what homeowners want to hear in the middle of hurricane season, but an insurance giant has asked the state for a sizable rate increase along with an announcement that it will drop homeowner policies.
At at a public hearing on Tuesday, in Tallahassee, State Farm requested to raise homeowner's insurance for Florida residents by an average of 47.1%. The largest private homeowners' insurer in Florida, State Farm has approximately 1 million customers in the state.
It also asked to drop all or part of its coverage on 31,000 homeowners' policies at renewal time. About 15,000 of those are condo unit owners and they are total cancellations. Another 16,000 policyholders would be offered a policy without wind coverage. It's likely the wind coverage would end up with Citizens Property Insurance.
In the last 8 years, the insurer said it has paid out more in claims than it has charged. A company spokesman said State Farm had spent around $1.20 for every $1 collected in homeowner's insurance since 2000. So they've asked permission to raise rates by an average of 47% beginning next March.
The increase in rates would be higher for South Florida. Broward homeowners with State Farm could see their rates go up anywhere from 41% to 62%; in Miami Dade rates could increase anywhere from 45% to 70%.
This is not the first time State Farm has asked for a substantial increase. Two years ago, the company's South Florida customers saw their premiums nearly double.
Sam Miller, with the Florida Insurance Council, says State Farm needs the extra money to stay in business in the state.
"They look at all of that and calculate the money they need to generate now to make sure they can pay their claims," said Miller.
Insurance companies are heavily invested on Wall Street and have seen losses like everyone else over the last few years. Florida's Chief Financial Officer Alex Sink said this year the state's CAT Fund will help tide over insurance companies in most hurricane scenarios.
"We are in better shape this year than we were last year," said Sink.
State Farm customers are urged to check their policies to ensure they are getting all the discounts for which they are entitled.
Click Here to see ways to protect your home from windstorm damage.
For those looking to leave State Farm; shop around. Several new companies have begun writing policies in Florida at competitive rates.
Click Here for things to consider when insuring your home.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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