Is State Farm still providing sinkhole coverage to Floridians?
In prior posts, we’ve addressed legislative and regulatory developments impacting larger Florida insurers, such as State Farm. For instance, Florida Governor Charlie Crist has been quoted as saying “good riddance” to State Farm, and in June 2009, he vetoed the Florida Consumer Choice Act, which would have allowed insurers to establish rates different from those set by the Florida Office of Insurance Regulation (OIR). (Read my blog post, Governor Crist Vetoes “Consumer Choice Bill, for more information.)
Suffice to say, the political climate here in Florida has been unfavorable to State Farm and even forced them to issue a withdrawal plan in January 2009. However, on December 16, 2009, State Farm and the OIR entered into a consent order, which will allow State Farm to continue to do business in Florida. The agreement provides that State Farm will non-renew no more than 125,000 polices, approximately 15% of its 810,000 policies.
What happens to lost insureds
For the policies that are non-renewed, State Farm will allow its agents to directly place business with private carriers for which their agents have service agreements. Finally, the OIR accepted a 14.8% flat rate increase for State Farm’s homeowners and condominium unit owner’s policies.
According to State Farm, the terms of the consent order, along with an August agreement that allowed State Farm to eliminate certain discount premiums, enable the company to remain in the state and continue to protect against catastrophic losses.
Still with State Farm? You will pay more
Because of the removal of discounts on premiums and the flat rate increase, homeowners insured by State Farm will likely experience increased premiums, especially in those areas susceptible to catastrophic losses, such as hurricanes and sinkholes.
This is an especially important issue for people who may later suffer from sinkhole losses because any insured who now cannot afford these higher premiums will likely change insurance companies. In that scenario, you can find yourself in a “whose claim is this” problem between the two companies. As such, be careful in the manner in which you seek new coverage.