Farmers Insurance customers living closer to the coast could see home insurance rates climb higher than the average 9.9 percent statewide hike the company notified regulators about this week.

Policyholders living in Houston and Dallas will see rates climb as high as an average 20 percent or as little as 1 percent, depending on where in each city they live.

The company did not say specify which parts of the city will receive the higher or lower hikes.

In San Antionio, rate increases will range from 1 percent to 14 percent.

The company needs the higher rates because of a 9.5 percent increase in claims costs and a 20 percent increase reinsurance costs, said Michelle Levy, a Farmers spokeswoman. Reinsurance is coverage insurers buy to help pay for claims during a catastrophe.

The state’s third-largest home insurer filed the rate hike earlier this week with regulators and implemented them immediately.

Under the state’s “file and use” system, companies can implement rates as soon as they notify state regulators about them. If the Texas Department of Insurance deems the rates unreasonable, excessive or unfair, it can order the company to pay refunds as well as interest to policyholders.

Farmers sells home insurance through its Texas companies Farmers Insurance Exchange, Fire Insurance Exchange and Texas Farmers Insurance Co.

Farmers has 760,000 home policyholders in Texas. But only 285,000 —those with a “Texas Family Home Policy” issued by Texas Farmers Insurance Co.—will see the increase. Those policyholders last saw rates climb in May 2008, when rates jumped an average 7.9 percent.

Farmers has 760,000 home policyholders in Texas. But only 285,000 —those with a “Texas Family Home Policy” issued by Texas Farmers Insurance Co.—will see the increase. Those policyholders last saw rates climb in May 2008, when rates jumped an average 7.9 percent.

Customers with “HOA” policies saw rates go up an average 9.9 percent in February.

The latest rate increase was in the works before Hurricane Ike hit the Texas coast last year and is unrelated to claims from the hurricane, Levy said.

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

Back to Insurance Reform - Texas