One of Alabama’s largest homeowners’ insurers is raising rates on property insurance by as much as 35 percent per policy while dropping some 2,900 rental properties along the state coastline as part of plan to shore up its financial resources.
The Farmers Insurance Exchange announced it is implementing the changes in order to address the continued volatility and severity of Alabama’s property market.
“Farmers has experienced significant underwriting losses in Alabama in its homeowners insurance business for several years,” explained spokesperson Luis Sahagun.
The new rates will apply to some 60,000 policyholders including homeowners, condominium owners, renters, and landlords. Most of those policyholders will see their rates increase by up to 35 percent, although a few could see premium decreases in the range of 30 percent.
The new rate increase is just the latest in a string of rate increases implemented by the insurer. It increased rates by a statewide average of 20.1 percent in 2009, 1.6 percent in 2010, and 35 percent in 2012.
The Alabama Department of Insurance has signed off on its latest rate change, which started to take effect last month.
Along with the rate increase on homeowners policies, the insurer announced that as of Dec. 1, it would also no longer provide coverage on 2,900 rental properties in Baldwin and Mobile counties. Those homeowners will receive a non-renewal notice and then offered a similar policy without wind coverage.
Sahagun said that in the past Farmers has worked with other insurers to help provide coverage to those homeowners. In 2009, when the insurer stopped writing new wind coverage in Baldwin and Mobile counties, Farmers´ agents were able to offer those homeowners with a Farmers policy excluding wind coverage through another insurer.
He also said that the pullback in coverage will help the insurer maintain wind coverage on the majority of its policyholders.
“Residents of Alabama should understand that Farmers remains committed to the state as demonstrated by continuing to provide wind coverage to almost 42,000 households throughout the inland counties of the state,” said Sahagun.
“As part of its regular review of its business risk across the state, the company has determined that it will need to reduce its catastrophic hurricane exposure in coastal areas,” said Sahagun.
Topics Carriers Agribusiness Alabama Homeowners
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