Farmers Insurance is raising rates an average 9.9 percent for thousands of homeowners statewide.

The company filed the rate hike, which is effective immediately as policies come up for renewal, Tuesday with state insurance regulators.

“The need for this rate increase is driven by an increase in reinsurance costs and increased claims costs,” said Michelle Levy, a Farmers spokeswoman. Reinsurance is coverage insurers buy to help pay for claims during a catastrophe.

The rate increase was in the works before Hurricane Ike hit the Texas Coast last year, she said.

The hike applies to the company’s 285,000 policyholders who have a “Texas Family Home Policy,” which the insurer started to issue in February 2006. The company last raised rates on those policies in May 2008 when homeowners saw rates jump an average 7.9 percent.

A breakdown of average rate increases by county was not immediately available.

State regulators are reviewing the rates, said a spokesman for the Texas Department of Insurance.

Back to Insurance Reform - Texas