State Farm Dropping Some Coastal Policies in Texas

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State Farm has announced that it will not renew coverage for 6,000 personal and commercial policyholders along the Texas coast starting next year.

The state’s largest insurer said Sept. 14 that it will not renew policies for properties within 2,500 feet of coastal waters or bays, on barrier islands or peninsulas.

“Reducing our waterfront exposure will allow State Farm to meet the needs of more customers elsewhere in the coastal market that we might not otherwise be able to write at all,” said Sophie Harbert, a company spokeswoman.

The move will affect about 3,200 Galveston County policies, 780 in Harris County, 90 in Jefferson County and 79 in Chambers County, according to the company.

“It’s going to be a lot of people,” said B.B. Wilson, a resident of Bolivar Peninsula whose home has been covered by State Farm for 22 years. “Everybody’s going to want to get insurance right away with somebody else. It makes me want to switch right now, instead of when everybody gets in the rush.”

State Farm’s announcement comes as it haggles with state insurance regulators over its homeowner rates.

Jim Hurley, a spokesman for the Texas Department of Insurance, said the state would carefully review State Farm’s move.

“Somebody’s got to look out for all the homeowners,” Hurley said.

Harbert said policyholders will be given 60 days written notice before their policies are canceled. The cancellations will start with policies up for renewal in March, she said.

State Farm will continue to sell new home insurance and windstorm coverage for homes more than a mile inland in coastal counties, but the homes will be required to get a building code certificate from the Texas Windstorm Insurance Association.

Customers with homes between the 2,500-foot mark and a mile will be able to renew, but the company will not sell new policies.

Other insurers have also cut back on their coastal policies. Allstate, the state’s second-largest home insurer, announced in May that it will stop renewing windstorm coverage in coastal counties and part of Harris County starting next month.

Other companies cutting back or dropping windstorm coverage along the coast include American National Property and Casualty, Texas Farm Bureau Insurance Co., Horace Mann Insurance, Beacon Insurance and Middle States Insurance Co.

Some coastal customers have been moved into the Texas Windstorm Insurance Association, an insurer of last resort for residential and commercial property owners. The association recently asked the state for permission to increase its rates.