State Farm is in the process of finalizing which policies it will drop in the State of Florida. State Farm is the largest private-sector property insurer in the State.
Homeowners with State Farm policies will find out in coming weeks if they’ve made the cut. Currently, the insurer is in the final stages of notifying 125,000 homeowners that they’re being dropped. This process began about a year ago and has forced many Floridians to run to the state’s insurer of last resort, Citizens Property Insurance.
The purge of policies was part of a deal that State Farm cut with Florida Insurance Commissioner in 2009. The deal was made so that State Farm wouldn’t completely leave the Florida market. As part of the deal, State Farm could keep about 700,000 homeowners policies. In return, the Insurance Commission allowed State Farm to institute a 15 percent rate increase.
The purge has targeted homes within 5 miles of water. A State Farm spokesman confirmed that most of the dropped policies are close to the coast and in places where the company has a high concentration of loss exposure.
According to the spokesman, non-renewal letters have been going out for the past 11 months. One month remains in this process. State Farm is providing its customers with at least six months notice of the non-renewal. Even with these cutbacks State Farm will remain the largest private-sector property insurer in Florida.
More troubelsome yet is the fact that many homeowners, including those dropped by State Farm, could end paying higher insurance premiums but with less coverage.
It is believed that more than 4 million Florida homeowners are about to get hit by rate hikes and shrinking coverage. Even though we have not been hit by a hurricane in five years, the State’s insurance regulators have already approved $718 million in rate increases, as well as allowed State Farm to abandon many homeowners forcing many of them to get insurance coverage from Citiznes – Florida’s insurer of last resort.
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