Home insurance rates are set to go up this month for State Farm customers, the second time in nine months the state’s largest insurer has raised rates.
The 4.5 percent increase in Texas home insurance rates that takes effect this month follows an 8.5 percent increase in October. State Farm cited the rising cost of doing business for the increases.
The back-to-back rate increases have alarmed the state’s insurance commissioner, who has expressed concerns that other insurers may follow State Farm’s lead and also raise rates.
The impact of State Farm’s rate changes vary widely around the state. San Antonio residents could see their homeowners rates jump more than 11 percent, based on data from the Texas Department of Insurance.
The state agency performed its own calculations to assess how the rate changes will impact State Farm customers around the state. It’s the first time the agency has posted such an analysis on its website.
“Focusing on percentages is misleading,” responded Patti Kelly, a State Farm spokeswoman. “The price customers pay for homeowners insurance is very much influenced by a variety of factors.” They include a house’s location, the type of construction, coverage, deductibles and discounts for having other lines of insurance with State Farm.
The agency found that on a $150,000 frame house built 10 years ago in the 78233 ZIP code of San Antonio, the two rate increases would raise premiums $151, or 11.8 percent, to $1,426. The example assumes a $1,500 deductible and replacement cost on the home’s contents.
A State Farm policyholder who has both home and auto coverage would see their premiums rise $57, or about 5.3 percent, to $1,141, as a result of the two rate increases.
The Texas Department of Insurance looked at similarly valued homes in 65 different locations around the state. It found the two rate increases differ greatly in size depending on location.
One Fort Worth ZIP code registered a 31 percent increase from the two rate changes. But premiums actually declined 2.5 percent in one Houston ZIP code. Meanwhile, premiums rocketed 25.7 percent in one Dallas ZIP code, while premiums were up 4.4 percent in an Austin ZIP code. The examples include discounts for homeowners who also have auto coverage with State Farm. Nine out of 10 State Farm customers have multiple lines of insurance with the company, Kelly said. Kelly objected to the state only including one ZIP code for San Antonio in its analysis. She emphasized the figure for San Antonio represents a “sample” only for that one ZIP code.
