News reports on the increase in home insurance rates by State Farm Insurance in Florida prompted strong reactions from homeowners, as seen in the comment sections of news websites.
State Farm Insurance has been allowed by the Florida Office of Insurance Regulation to increase its house insurance rates by an average of 18.8 percent this year, starting July 1 for new customers and starting July 15 for existing customers who are renewing their policies. The firm also received approval for a 62-percent increase in premiums for commercial residential properties, such as rental homes.
A State Farm executive explained that not all of the 632,000 existing policyholders in Florida will be shouldering the 18.8-percent increase. He said that increases in premiums will depend on which zones the homes are located and on policy type. In the counties of Broward and Miami-Dade, the changes in rates range from a decrease of 9.8 percent to an increase of 64.3 percent. There are more than 65,000 State Farm policyholders in these two counties.
In State Farm’s original filing, it asked for an average rate increase of 28 percent. It even threatened to leave Florida if its requested rate increase was not granted. Now it appears that State Farm is staying and is now arguing that even if the state has not experienced a major hurricane in the past five years, it lost a lot of money from claims not related to hurricanes.
In news websites, a lot of those commenting are advising homeowners to leave State Farm and move to other insurance firms but most of them are not telling which insurers should homeowners turn to.
The question then is: Is there really another large private home insurance company that Florida homeowners can turn to?
State Farm Insurance
State Farm is the second largest home insurance firm in Florida, behind Citizens Insurance Property Corp., which is owned and managed by the state.
Citizens Insurance
If homeowners move to Citizens Insurance, the current number of Citizens policyholders – 1.3 million – can balloon to a number that will be unaffordable for Citizens in case of a major hurricane. Citizens is also restricted to an annual increase of only 10 percent, although legislators have launched an effort to increase this to 25 percent.
Allstate Floridian
Under a deal with the state of Florida, Allstate is allowed to write only 50,000 new home insurance policies over a period of three years. Allstate also changed its name to Castle Key Insurance Co.
Nationwide of Florida
Nationwide Insurance is set to cancel a number of home insurance policies but is available in Miami through ALC Risk Solutions.
According to home insurance brokers in Florida, there are at least 40 insurance firms writing home insurance policies in Florida. In addition to the large insurers such as Citizens, State Farm, Allstate and Nationwide, the other firms include Avatar Insurance, Florida Peninsula Insurance Co., and Gulfstream Property and Casualty Insurance Co.
This blogpost is not an endorsement of any insurance firm. You need to conduct your own research. This is just a note about State Farm’s rising rates and your option to look for alternative home insurance products.
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